DXY is back on more tariff talk.
AUD was soft.
Lead boots are weighing.
Gold is a machine.
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Copper bubble!
Miners lagging.
EM perhaps.
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Junk within the trunk.
Yields up.
Shares down.
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AUD CFTC nonetheless very quick in futures however lengthy in choices. Futures rule.
US jobs have been affordable sufficient—142k and 4% UE. Wages are nonetheless agency.
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BofA says it’s too early to purchase AUD.
AUDFX has been extremely delicate to tariff noise, particularly China-related, briefly reaching post-Covid lows vs. each USD and its trade-weighted basket. Whereas in step with our bearish 1Q outlook, the present stage is near our forecast trough at 0.62.
Whereas we stay snug with this forecast, it’s too early to fade the tariff threat premium simply but.
US tariff actions have to date skewed somewhat extra to nations apart from China, in flip conserving CNY depreciation in examine, however dangers are skewed to the draw back with related spillover to AUD.
In the meantime, sustained disinflation has introduced ahead our economists’ forecast for RBA charge cuts so charge differentials are now not an apparent tailwind for AUD.
Nevertheless, we proceed to see a gradual restoration in AUD from 2Q onward, propelled first by USD depreciation adopted by the lagged affect of China stimulus within the second half of ‘25.
Our new forecast for a better RBA terminal coverage charge of three.6% premised on sticky inflation helps a medium-term trough in AUD as nicely.
Meh. I’m nonetheless bullish AUD short-term on Trump’s weak tariffs thus far, bearish market positioning, and misjudgments about excessive RBA terminal charges.
I’m nonetheless extra bearish later as Trump versus China deteriorates and CNY falls, iron ore is clubbed with Simandou, and the RBA is pressured decrease most suppose in 2026.
For now, bear looking season is unbroken.
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