Credit Suisse with the note. I agree with this but will only add that the coming equities smash will not aid AUD!
FX market price action continues to follow along the shaky path we’ve felt it’s been on since the downside surprise for US Oct CPI, namely a structural unwinding of long USD positions punctured by periodic data-driven greenback recoveries. The approach of year end certainly encourages profit taking and lighter positions even amongst the strongest hands with the best 2022 performance thus far.
Supporting this view is price action, which has been erratic but, on the margin, leaning against the USD. Although data outcomes remain mixed, we perceive an ongoing asymmetry still towards reacting strongly to dovish developments vs to
hawkish ones. Last week’s speech by Fed chair Powell was an example of this asymmetry, with the market going out of its way to concoct dovish interpretations, to the chagrin of many economists who felt the speech was mischaracterized.
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