Australian dollar jet runs short of fuel

David Llewellyn-Smith

Friday 15 December 2023

DXY rebounded:

AUD stalled:

CNY is going nowhere:

Brent was flat:

Dirt calmed:

Big miners are at resistance:

EM is finished:

Junk flamed out:

Duration kept crashing:

Stocks up:

It is literally a matter of fuel for the AUD rally.

Either oil keeps getting cheaper, US yields keep falling, and the combined effect delivers a US economic soft landing that drives stocks to record highs and higher AUD.

Or, oil catches a bid with widening “risk on” trade, yields stabilise or reverse higher, stocks drop, the Fed pivot is cut off at the knees, DXY rebounds and AUD falls.

I believe there is a looming oil glut, and the market should keep pursuing the highest cost marginal producers down around $60 Brent.

Thus, I also remain bullish on bonds, stocks and AUD:

About the author

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific's leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.