The most interesting chart out there for me right now is AUD/USD the ongoing rejection of the break lower. What’s telling is that even with the dovish surprise yesterday, it wouldn’t go down further. As I often write: When something can’t go down on bad news, it can’t go down at all.
The caveat I would add to that is that we’ve had three big rallies in US equities in a row; so I’d like to see how well the Aussie holds up when the worm turns. But another question is whether it will turn at all. The front end of the rates market has flattened out just below 1.20% and that’s been good enough for the bulls. I expect a series of fits and starts in the risk trade for months to come and I expect the same pattern to continue to play out. Equities freak out when rates are rising then dips are bought the moment rates level off.