Australian dollar firms as stockmarkets crash

The DXY blowoff has flamed out:

AUD firmed:

Commodites all bounced:

But not EM stocks:

Or junk:

The curve flattened:

And stocks sank:

The DXY feels tactical to me. Following this week’s UK-inspired rout, markets are toying with the idea that the Fed is nearing the end. Futures are reducing the odds of a 75bps hike in Nov:

The problem is, monthly inflation has come down but has stalled at high levels. The Cleveland Fed’s Nowcasting model:

And, as petrol prices have fallen so far, economic activity is lifting! Goldman’s Current Activity Indicator:

The base case is that the Fed is not done and will keep hiking at breakneck speed until something bigger than moronic UK tax cuts breaks.

Therefore, the AUD has not bottomed.