Australian dollar jaws tear investors apart

DXY is looking for a short squeeze.

AUD is holding so far.

Lead boots are Ok.

Oil is a favour to all.

Metals say no to growth.

Big miners = big bear.

EM yawn.

Junk says no to growth. Warning!

The curve flattened.

Stocks partying on VIX compression.

Which is driving the DXY bid.

Oversold!

EUR no alternative.

And massively overshot.

Markets are trying to unwind the extremes, but growth and profits are still at very high risk, so fundamentals are not rising to meet them.

The AUD is caught in the middle, but remember, it usually follows EUR, so markets may win over economies in the short term for AUD.

Be aware of the AUD jaws snapping shut suddenly to the downside.

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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.