Australian dollar crushed as robots flee

DXY continues its marked rebound as EUR tumbles:

AUD was squashed under fleeing robot boots:

Gold and oil rebounded:

Base metals nope:

Big miners nope. Perhaps some rude awakening about the nature of the Chinese rebound underway:

EM stocks were smashed:

Junk too:

As the Treasury curve choked:

And stocks puked:

For now, the DXY mechanical long is reversing as robots panic. BofA:

Model CTA USD shorts are all at risk of covering next week

Each of the FXpairs against USD we trackin our trend following (CTA) model are at risk of being covered next week. For now, at least, the recent decline in USD hit a low on Wednesday this week post Fed Chair Powell’s speech. Sharp moves higher in USD on Thursday and Friday have left each of our model CTA’s short USD positions at risk of a cover. In order, the pairs most near their trigger points are MXN, EUR, AUD, GBP, an dfinally JPY. Specific trigger points are listed in Exhibit 1.

Such are overbought markets. The broader question is is it signal? Credit Agricole:

Last week’s price action suggests that the relative central bank policy outlook and the resilience of the global economic outlook will remain relevant FX market drivers and could re-introduce the ‘USD smile’ as a framework to analyse the markets. In particular, the relative resilience of the US economy that has previously helped the Fed become the most hawkish G10 central bank and cement the role of the USD as the high-yielding, safe haven could keep Fed rate cut bets at bay and once again restore the relative rate appeal of the USD. According to the ‘USD smile’, the USD could outperform currencies with inferior rate advantage and/or where the markets expect future rate cuts as seems to be the case of the GBP. Focus this week will be on the Fed speakers with Fed Chair Jerome Powell due to speak tomorrow. We think that the latest US data should add credibility to the Fed’spushback against market rate cut expectations and give the USD a boost.

I can’t see how he can do anything else after the ripping jobs data.