A$ Falls Sharply, Underperforms G10 Post Stronger US CPI

AUD/USD lost 1.75% for Wednesday's session, the worst performer in the G10 space. The bulk of the losses came after the stronger than expected US CPI print. The pair fell from above 0.6620 to just under 0.6500, where some support was evident. We track in the 0.6510/15 region in early Thursday trade. Technically, support at 0.6478, the Mar 5 low could be in focus, while the bear trigger rests at 0.6443 (Feb 13 low). Wednesday's sharp sell off reinstates the bearish threat.

• Us yields surged post the CPI print, led by the front end, with 2-7yr yields up by more than 20bps. Projected rate cut pricing receded with the first 25bp cut priced for November. This aided broad USD gains, the BBDXY up 0.75% (the DXY +1.0%).
• Equity sentiment faltered in the US, with the SPX down nearly 1% (real US 10yr yields rose 15bps to 2.15%). This hurt higher beta plays in the FX space, with yen and CHF dropping less than the AUD. AUD/JPY is back to 99.70, against recent highs near 100.8.
• The Bloomberg aggregate commodity index rose 0.40%, the 9th straight run of gains, while the metals index firmed a further 0.38%. This didn't aid AUD sentiment though.
• On the data front, we have Mar household spending measure from CBA, along with Apr consumer inflation expectations.
• We have the following in the option expiries for NY cut later: $0.6475-85(A$954mln).