Carry Bloodbath Resumes With Full Blown Liquidations Imminent
After earlier we saw the decimation of the European currency, it is now Asia's turn where an impressive bloodbath is now raging. The AUDUSD is in freefall, having moved a massive 300 pips from yesterday's high to today's low. At under 50 pips from 0.855, the AUDUSD will likely breach 0.85 at which point the destruction at carry desks will become an epidemic, and full liquidations will soon ensue, coupled with billion dollar margin calls, forcing global asset liquidations at bulge brackets. With the carry collapse pervasive, don't look to futures to stage any miraculous Fed-inspired ramps tonight: Germany may have well called the Fed's bluff.