Australian dollar rally flames out

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DXY is trying to push higher.

AUD is a bit stalled.

Lead boots too.

And gold. I don’t know what oil is doing.

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Perhaps chasing copper as Trump slams the market with a 50% tariff.

Nothing can save the big miners.

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EM rolled.

Junk false breakout.

As Trump tarifflation is back.

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Stocks no likee.

Yields and DXY are moving together again.

Plenty of DXY catch-up.

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And seasonality to help.

In normal circumstances, given how short DXY everybody is, it looks pretty good odds that we’re in for a counter-trend rally.

Trump might not even object, given his tarifflation needs to be fought off.

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But, given his penchant for headlines and shooting himself in the foot, the risk is he will do something reckless again.

The obvious candidate is Fed Chair Jay Powell.

In May, the Supreme Court ruled that the Fed was largely protected from Trump, but he could try to use an early 2026 governor’s vacancy to appoint a new chair.

Moreover, he could talk it up.

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If he got aggressive enough, this would dislocate DXY and yields again.

That said. DXY needs a pause. The short is so large that some wood needs to chopped before it can push lower.

It appears AUD is about to stall out.

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.