Australian dollar mini-me rally continues

DXY was firm Friday night. EUR soft:

AUD is on fire:

Commodities yawn:

Big miners eased:

EM stocks bouncy:

Junk yawn:

US curve flattened again:

Stocks eked out a gain:

The AUD is enjoying a mini-me rally repeat from earlier this year when DXY fell materially:

• the Fed was thought to be done as the US economy fell away,
• China was reopening,
• Europe was considered the prime beneficiary, and
• equities were priced for recession.

However, this time around it is different:

• the Fed may pause but it probably still has further to go,
• Chinese stimulus is fighting structural headwinds in property that it cannot overcome,
• Europe is sliding inexorably into recession, and
• equities are priced for a boom.

Thus, I prefer to think of this rally as the fallacious mini-me of the past six months and do not expect the same magnitude of bounce for AUD.

I’ll be using it to reset shorts.