DXY is flopping around like a dead fish.
AUD is back near the top of its rising channel.
Lead boots are floating higher.
Two shorts?
Metals grinding higher.
Miners yuk.
EM meh.
Junk OK.
The steepener steepens.
Stocks love a good bombing.
All together now to the Beach Boys “Bomb, bomb, bomb…bomb, bomb Iran. Bomb, bomb, bomb…bomb, bomb Iran. Bomb Iraaaaan!”
It’s a song that delighted the Beltway for decades, and they finally get to dance to it.
Nobody cares. It’ll go on until Israel has set the Persians back for another two decades.
And markets love a good war.
Although, interestingly, the AUD usually does not, which is the most noteworthy FX point this morning.
Once again, we have the inversion of the traditional safe havens like DXY and Treasuries being weak, while traditionally vulnerable risk assets like AUD are strong.
This is Trump’s Costanza world, in which the strong seek weakness and the weak are forced to be strong or be destroyed.
This new regime has been through several tests now. A war, an oil spike, RBA cuts, a tariff war and backdown, and US fiscal tightening and loosening.
It looks like so long as Trump is at the helm, AUD is going to rise.
