Australian dollar assumes the brace position

David Llewellyn-Smith

Sunday 21 August 2022

DXY is up and away and that’s the end of everything bear market rally:

AUD bye, bye:

Markets getting ever shorter:

Everything EM and commodities is junk:

The Treasury curve steepened:

Stocks puked:

The bear market rally is over. DXY is signaling a major push to save haven assets. There are tail risks in this, the most obvious of which is that Chinese capital outflow will accelerate and CNY tumble. It has broken support:

Note that the last big wave of selling for stocks and the AUD coincided directly with CNY falling out of bed.

Given it is probably only halfway down I suggest that you bend over and place your head firmly between your legs.

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.