A$ Rebound Runs Out Of Steam On Equity Pullback, Inflation Expectations Due

AUD/USD is back where it started yesterday, after a whirlwind overnight session. We open at 0.6940, not too far from the overnight lows around 0.6930. The overnight high was just above 0.7050.

• The A$ tracked weaker US equity sentiment, particularly towards the tail end of the overnight session. The VIX index ended around similar levels to yesterday at 32.50%.
• Commodities were higher, the Bloomberg spot index up by 2.2%, led by oil, but copper was also higher, while iron ore remains above $130/tonne. This likely helped limit AUD losses.
• Yield spreads initially moved against AUD post the US CPI release but ended the session close to yesterday's closing levels.
• AUD/JPY could be watched today, we dipped sub-90.00 overnight (after trading as high as 91.77). We are back above this level now, but the yen outperformed overnight on the move lower in US equities and limited US yield follow through from CPI data (in net terms, come the close, although there was plenty of intraday vol., as noted above).
• Consumer inflation expectations for May are out today in Australia. The last print was 5.2%.
• Technical studies remain bearish for AUD/USD, initial support is at the May 10 low (0.6911), with the next level below there seen at the 0.618 Fibonacci projection of the Apr 5 -May 2-May 4 price swing (0.6876).