AUSTRALIA: NZ CPI Data Suggests Stable Q3 Australian Core

The BBDXY range Friday night was 1196.37 - 1200.34, Asia is currently trading around 1199, +0.05%. The USD continues to grind out gains as the market is being forced to recalibrate, having gone into last week's FOMC a little over its skis in terms of positioning. How far can this market retrace, I suspect sellers would be all over a bounce back toward the 1200/1210 area initially. A break below 1180 has been put off for now, but it feels like it's just a question of time before we have another look down there.

• Otavio Costa on X: “When you consider that the Fed’s preferred inflation gauge is not only near 3% but also inflecting higher, this rate cut was more than a policy change — it was a statement. This is no longer monetary policy; it’s fiscal necessity. The Fed’s latest, unspoken mandate is to ease the government’s debt burden. ”
• “The real story here is the US dollar: As weak as it appears, the DXY is sitting on a 14-year support level that, in my view, looks ready to break. The dollar anchors global assets, and on a 10-year rolling basis it’s arguably already broken down. That’s likely the beginning of a secular trend.”
• “My 2 cents: Expect EM equities, EM debt, and gold miners — all leveraged dollar-bear trades — to keep drawing capital, in my view.” See Graph Below.
• (Bloomberg) -- Bank of America Corp. is sticking with a positive view on emerging-market local markets following this week’s Fed meeting, arguing that carry trades in the developing world remain the best option for investors that want to sell the US dollar but struggle to find G10 alternatives to buy.

Fig 1: US Dollar Cycle

Source: MNI - Market News/@TaviCosta/Bloomberg

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