Australian dollar floats on oil


DXY eased:

AUD popped:

No help from North Asia:

Oil bull:


Dirt bull:

Mining bust:

EM false break out:


Junk is warning:

Yields eased:

Stocks puked:


Weirdly, it is a battle between dovish Fed speakers pushing down DXY and an oil bull run that has mounting geopolitical tailwinds, and dovish Fed speakers behind it. UBS has more:

  • Rally / buying right into the 14:30 New York energy close – suggests heavy index fund prepositioning ahead of GSCI roll onset tomorrow where energy will be upweighted in the index
  • Geopolitics – reports of potential attacks within Iran and also potential retaliation toward Israel following Monday’s airstrikes.
  • Bullish consensus and flow – a number of Street strategists have been out today talking about upside risk toward the $95-100 range in crude. Meanwhile, flows here have skewed toward upside buying in the options space
  • Technicals – Front-month WTI crude oil just completed a ‘golden cross’ technical formation with the 50- and 200-day moving average crossover. The front month is aimed at $88.58 above; $91.08 is key as the 76.4% Fibonacci retracement level in Brent… which is precisely where Brent is trading at this moment.

The more dovish the Fed gets, the more hawkish oil becomes.


I can’t see AUD getting very far in this environment.

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.