We have two moving pieces here...
On the USD side after Powell confirming what we already knew yesterday that they will be introducing "QE Lite" .. simply meaning we are going to mark the highs for a very long time in USD. Recession is coming, capital preservation is a must. I am completely flat on fixed income, heavily loaded in FX and tracking earnings continuing to fall. Expecting China-US deal to fall through and leave me cutting further the outlooks for US.
Lower rates do not work...Yesterday we saw 5y5y trading at new lows, despite more FED and ECB combo...in other words the return of inflation does not come via low interest rates. Fiscal expansion is necessary but it will be too late by then, so the dollar is the only tool to help create global liquidity.
On the AUD side, I cannot agree with the current pricing of a 50% chance that the RBA cut further in November. It is too ambitious for me and I would recommend fading the AUD weakness. Remember the Giant Panda was spotted on the bid earlier in the year. We are entering into a chapter where bad news will be good news for AUD, recommend highlighting the flows that are following the consumer sentiment miss, despite the RBA cutting last week the drivers are changing...
I will continue to update this thread over the coming Months and Quarters so feel free to jump in with your idea generation and we can further the discussion for all.
Good luck!
On the USD side after Powell confirming what we already knew yesterday that they will be introducing "QE Lite" .. simply meaning we are going to mark the highs for a very long time in USD. Recession is coming, capital preservation is a must. I am completely flat on fixed income, heavily loaded in FX and tracking earnings continuing to fall. Expecting China-US deal to fall through and leave me cutting further the outlooks for US.
Lower rates do not work...Yesterday we saw 5y5y trading at new lows, despite more FED and ECB combo...in other words the return of inflation does not come via low interest rates. Fiscal expansion is necessary but it will be too late by then, so the dollar is the only tool to help create global liquidity.
On the AUD side, I cannot agree with the current pricing of a 50% chance that the RBA cut further in November. It is too ambitious for me and I would recommend fading the AUD weakness. Remember the Giant Panda was spotted on the bid earlier in the year. We are entering into a chapter where bad news will be good news for AUD, recommend highlighting the flows that are following the consumer sentiment miss, despite the RBA cutting last week the drivers are changing...
I will continue to update this thread over the coming Months and Quarters so feel free to jump in with your idea generation and we can further the discussion for all.
Good luck!
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An update to the Yields chart:
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AUD$ breaking higher for the close .. expecting continuation of the same dollar outflows
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Superb moves here
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