Australian dollar poleaxed by global shock

DXY to the moon and EUR to where it deserves:

AUD poleaxed and near breaking to one year lows:

Oil and gold could not stand the heat:

Dirt hosed but still pricing a recovery:

Big miners crushed:

Without China, EM may return to being the “Third World” asset class:

Junk yuk:

US long yields took off:

Stocks finally cracked:

The proximate cause was the US Fitch downgrade, but the real problem for markets is that US growth is too strong relative to everywhere else.

ADP is still hot:

Private sector employment increased by 324,000 jobs in July and annual pay was up 6.2 percent year-over-year, according to the July ADP® National Employment ReportTM produced by the ADP Research Institute® in collaboration with the Stanford Digital Economy Lab (“Stanford Lab”).

NBS is Friday. If it is at all similar, then the earth is going to shake.

Meanwhile, Europe is a developing disaster:

And China is worse as the property adjustment shunts nominal growth lower permanently (chart is illustrative only):

The US economy was fortified by COVID-extended corporate liabilities. Bidenomics fiscally-charged growth. Mad stocks have inflated it further with robots super-long.

DXY can’t fall under these circumstances. It must rise. As it does, it will steamroll economies worldwide until enough deflation feeds back into the US for the FOMC to pivot.

A global recession is coming, and AUD is its whipping boy.