Australian dollar taken hostage by dramatic US election

See the latest Australian dollar analysis here:

Macro Afternoon

DXY is stuck on the spot:

The EUR position long came off a bit on CFTC:

The Australian dollar fell but was still firm:

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CFTC longs are increasing as markets buy the dip:

Gold is likewise stalled within a bullish pennant:

Positioning is working off the CFTC long:

Oil has normalised:

Base metals are mixed:

Big miners fell:

EM stocks are trading on DXY:

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:

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

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:

And there is precedent for trouble:

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

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

David Llewellyn-Smith

Comments

  1. If stocks are down for the year at election day it dramatically increases the chances of a Biden win (with an 84% probability).

    Trump had better make sure Powell has the printers maxed to 11 ๐Ÿ˜‰

    • I’m sure cash rates moving from 0.25% to 0.1% will finally ignite the economy and create a million new jobs.

      *Phil Lowe and committee all huddling in a dark room, terror written on their faces, crossing fingers”*

      • You need to lower the rates before opening the gates. It’s all gonna be so good next year. Extend the insolvent trading moratorium out to after the election. Backstop thebanks and gently manage the delinquent mortgages in a coordinated fashion. We’ve got the states agreeing to increase hotel quarantine capacity so we can get the Aussies os home before welcoming migrants and foreign students here for a shiny happy future of economic freedom and a life of untold ease after working hard for a few years. China’s starting a global commodities stockpiling binge to get rid of (in their view) their ever increasingly worthless USD and give Winnie more wiggle room if he decides a foreign military engagement is required to keep the lid on unrest at home, so even if they don’t buy directly from us they’re still saving us cos most commodities are fungible (how lucky is Straya?๐Ÿ˜€). Boom times are coming. Don’t sell your house now!

        • Goldstandard1MEMBER

          The bigger the bubble, the bigger the trouble when any of the above factors turn stinky……

          • +100
            I was being my usual obtuse mixture of sarcastic and sorta realistic. I’d like to exit from this horror show but I try to force myself to be realistic and to consider what might be mitigating factors that could keep the whole grotesque facade continuing for a while longer yet. It’s one reason why I did not sell out of the stock market earlier this year (which proved to be a very financially redeeming decision).

        • Excellent summation, pop, as usual. The powers-that-be will try every filthy trick in the book to keep the various bubbles aloft, irrespective of the long-term detrimental impact.