Australian dollar abandoned as dead cat roars

DXY is back.

AUD is forgotten.

Lead boots are shaky again.

Oil is a dead cat. Gold consolidating.

Base metals growth no bueno.

Big miners caput.

EM caput.

Junk is nervous.

Yields uh oh for dead cat stocks.

Dead cat looking lifeless.

Current forex dynamics are not complex.

If you want to buy dead cat US stocks, you’re going to need dead cat US dollars.

AUD is caught between the US dead cat, with yields starting to buy into some a US growth miracle comeback, and the developing China shock.

My base case remains that both the US and China will slow markedly in due course.

At that point, the current AUD dynamic will reverse, DXY will fall, but weakening Chinese growth will stop AUD from rising.

It’s anybody’s guess where the AUD goes in the near term.