See the latest Australian dollar analysis here:
DXY was down solidly last night as EUR rallies:

AUD took its cue:
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But oil broke, a distinct break of pattern with just about everything:

Weirdly, metals lifted. If oil keeps falling then this won’t last:

Miners were flat even as iron ore tanks:

EM popped:

But not junk:

The curve is sinking ever deeper into the red:

And stocks don’t care:

The oil breakdown was one of my major preconditions for seeing a Fed pivot so this supports the risk asset rally. Is it enough to justify it? The Market Ear has more on the oil break:
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The problem for the Fed is that this is easing financial conditions for households and businesses which will lift inflation even as falling oil pressures it lower.
Hence I still see the Fed tightening and, more importantly, much further than anybody else, supporting DXY.
So I am still struggling to find a bull case for AUD, especially since local data is already falling away fast.
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.
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