Australian dollar calls the Fed’s bluff


DXY fell:

AUD dumped then pumped:

North Asia helped:

Oil slumped on Gaza peace hopes:


Metals followed:

Miners meh:

EM meh:


Junk meh:

Treasuries do not believe Jay Powell hawkishness:

Which lifted stocks:


US data was decent, with the ISM and construction spending printing above expectations:

But it should still not lift DXY.


The market is calling Jay Powell’s hawkish bluff. This is AUD bullish at the margin.

However, last night’s also shows the risks. The downside break was severe before the rally took hold.

A range-bound AUD with downside risks is now my outlook.

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.