USD Squeezed and Steepened

The USD is strengthening as investors pare back dovish Fed expectations following strong manufacturing data and a short squeeze. Meanwhile, the RBA hiked rates to 3.85% in a hawkish shift driven by persistent inflation and growth concerns.

Key Takeaways

• 1.The USD is recovering due to better-than-expected US ISM manufacturing data and a squeeze of crowded short positions.
• 2.The Reserve Bank of Australia (RBA) delivered a hawkish 25bp rate hike to 3.85%, citing broad-based and persistent inflation.
• 3.A partial US government shutdown has delayed major labor market data releases (JOLTS and Non-farm Payrolls), shifting focus to Fed speeches.

Table of Contents

• Asia overnight
• USD: squeezed and steepened
• AUD: RBA performs a hawkish hike
• Open trade recommendations
• Key events
• Red Mount Analytics
• Global Markets Research contact details

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