Australian dollar smashed back down

You can’t keep a good DXY down,

AUD smashed back to the canvas.

North Asia has hardly responded yet.

Gold weathered the storm.

Dirt not so much.

Nor miners.

EM caput.

Junk still a worry.

As the US curve flattens.

Stocks struggled.

DXY is at the trading range highs. I expect this will eventually break out. But is it now?

Speculators are long but could get longer.

There is a long way for China to devalue when tariffs land. BCA reckons 8.5 would be needed to fully offset 60%.

That would translate to an AUD in the 50s. However, BCA also reckons China risks dangerous capital outflows in that event.

Then again, it risks dangerous domestic economic weakness if it doesn’t.

AUD has plenty of room to fall over 2025.