The US dollar is back on its feet today as Treasury yields rise and equity futures sink.
The Australian dollar is taking the brunt of the move and is the G10 laggard. AUD/USD is down 101 pips to 0.6639 and the lowest since last Friday.
Part of the negativity stems from the increasing covid case counts in China and fresh editorials in state-controlled media calling for covid-zero.
In the bigger picture, the short-USD squeeze has run out of juice with yesterday's strong US retail sales data making the argument that the economy is still running hot.
Fed fund futures put the terminal top at 5.00 today, up from 4.87% in the post-CPI swoon. Bullard's comments today tilted hawkishly, adding to it.
Techncially, we could go all the way back to 0.6550 and re-test the breakout of the minor double top in AUD/USD.
