Australian dollar smacked by European recession

DXY is up again as EUR swoons with its PMIs:

AUD pumped and dumped:

Uh oh oil:

The Crap Complex or dirt, miners, junk and EM barely raised a eyebrow at Chinese stimulus:

US yields popped:

Stocks firmed anyway:

European PMIs drove forex on the night. Goldman:

The Euro area composite flash PMI decreased by 1.0pt to 48.9, below consensus expectations, on the back of a broad-based decline across sectors. Across countries, the decline in the area-wide index was led by Germany and France. In the UK, the composite flash PMI decreased by 2.1pt to 50.7, also below consensus expectations. We see three main takeaways from today’s data. First, Euro area growth momentum continues to weaken across both sectors, driven in particular by France and Germany, where press releases attributed today’s weak print to a range of factors, including consumer hesitancy, inventory de-stocking, high inflation, and rising interest rates. Second, price pressures continue to moderate but the slower pace of moderation in the services sector continues to point towards stickiness in underlying inflationary pressures. This appears to be particularly true in Germany, where the services price components edged up surprisingly in July. Third, growth momentum in the UK also appears to be slowing, but remains in positive territory.

China won’t save Europe this time. In fact, it has fast become a major headwind via EV export. Neither will the US as its monetary tightening slowly chokes activity.

Markets are very long EUR and very short DXY. We appear set up for a reversal. Oil and Vol favour DXY as well.

While EUR is weak AUD is weaker.