Australian dollar crushed by European recession

DXY is up and away as EUR swoons:

AUD was pulverised:

Commodities rolled hard:

Big miners want to retest the lows:

EM stocks gave up:

EM junk is intriguing:

Yields eased:

Stocks fell:

It was a double blow for EUR and, therefore, AUD Friday night.

Europe is in recession, and it’s going to get worse. Flash PMIs are swooning:

France: The French composite flash PMI decreased by 3.8pt to 47.3, below consensus expectations. The composite decline was broad-based across sectors but skewed heavily towards services, which fell into contractionary territory after four consecutive months of above-50 postings.

Germany: The German composite flash PMI decreased by 3.1pt to 50.8, also below consensus expectations. The decline in the composite index was broad-based across sectors, although unlike the manufacturing output index, the services index remained in expansionary territory.

Periphery: The periphery composite PMI decreased by 1.1pt to 51.7. As in Germany, the composite decline was broad-based across sectors, although the services index remains in expansionary territory, while manufacturing output contracted further.

As well, China’s new premier, Li Quang, showed he is in no hurry for more stimulus to aid Europe’s export economy:

Premier Li Qiang told a summit in Paris that the Chinese economy has shown “upward momentum” this year and fundamentals for long-term sound economic development are unchanged.

China is not only not stimulating, but it is also rapidly evolving into a major threat to European car-makers as EV exports explode. This is a terrific development in geopolitical terms, given it will drive a wedge between the two and it’s not good for the European economy.

With the ECB still banging on about two more rate hikes, Europe looks set to lead the developed world into contraction. Recalling that it has virtually been there for six months already:

A weak Europe and China versus an AI-juiced US as the last growth man standing is very AUD bearish.