Australian dollar taken hostage by dramatic US election

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DXY is stuck on the spot:

The EUR position long came off a bit on CFTC:

The Australian dollar fell but was still firm:

CFTC longs are increasing as markets buy the dip:

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Gold is likewise stalled within a bullish pennant:

Positioning is working off the CFTC long:

Oil has normalised:

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Base metals are mixed:

Big miners fell:

EM stocks are trading on DXY:

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Junk is describing a warning:

US yields remain crushed:

While stocks look increasingly shaky. Nasdaq has broken the neckline on its head and shoulders top though it is not yet decisive:

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More selling still looks odds-on. The US “recovery” would still be better named the Second Great Depression:

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The Fed’s balance sheet is shrinking:

Fiscal is disappearing into electoral oblivion:

And now, Supreme Court Justice Ruth Ginsberg is dead. There are doubts she will be replaced prior to the election. This throws open the possibility of a deadlocked US election, real or engineered, followed by a deadlocked Supreme Court, given its numbers fall from nine to eight, though conservatives still outnumber progressives 5-3. This also suggests that Trump will push get that number to 6-3 before the election. Markets were already pricing election volatility before this:

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And there is precedent for trouble:

I haven’t even mentioned the rising risk of a hard Brexit.

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The Australian dollar bid will not survive a downside break in risk.

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.