Australian dollar down but not out

DXY is back in a big short squeeze.

AUD was dumped then pumped.

CNY supportive. JPY not.

Slaughter.

More slaughter.

Miners held on.

EM still coming off.

Junk no bueno.

The Warsh effect on yields will not please the boss.

Stocks rebounded moderately.

In data, the ISM popped.

Relative US growth is surging versus the world. If the Warsh appointment focuses the market back on fundamentals, then DXY has further to run.

CTAs way short as well.

If it’s all a range trade, then it’s not over.

More short-term pressure for AUD.

But assuming the RBA hikes, the bull case is intact a little longer.

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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.