The DXY consolidation rolls on.
The AUD smash does too.
CNY was supported.
I am bearish both gold and oil.
In fact, the whole Crap Complex is buggered: dirt, miners, EM and junk.
Yields are falling again.
Stocks are rising again.
ADP was weak, especially given bounce back from hurricanes.
Private sector employment increased by 146,000 jobs in November and annual pay was up 4.8 percent year-over-year, according to the November ADP® National Employment ReportTM produced by ADP Research in collaboration with the Stanford Digital Economy Lab (“Stanford Lab”). …
“While overall growth for the month was healthy, industry performance was mixed,” said Nela Richardson, chief economist, ADP. “Manufacturing was the weakest we’ve seen since spring. Financial services and leisure and hospitality were also soft.”
One wonders if a runaway DXY is starting to hit output. BLS will tell the tale Friday.
I expect one more upleg for DXY when Trump begins the tariff smash in earnest and China sinks CNY.
But that might be enough tightening of US financial conditions. Credit Agricole has more.
Important differences with 2018:
•2018: recovering US economy and accelerating inflation, the Fed hiked by 125bp and 10Y UST yield rallied by c.100bp
•2025: US growth and inflation slowdown, the Fed cuts.
•2018: tariffs and fiscal stimulus supported US growth and inflation as well as US rates and yields
•2025: Trump’s policy mix is stagflationary conditions in the US that could complicate but not derail the Fed easing cycle
•The USD is much stronger now than in 2018 and makes any Trump verbal intervention to weaken the currency more impactful.
I can’t entirely agree with all of that, but it is a timely warning that DXY will top and AUD bottom at some point.
I don’t think it will take all of 2025 to get there.
