A$ Higher As USD Falters, RBA Minutes Out Today

AUD/USD spent much of Monday's post-Asia trade recouping losses - we got as high as 0.6980 and open this morning at 0.6970. Broadly softer USD momentum, a moderation in risk aversion and higher commodities all aided the A$ recovery.

• Drivers for the AUD were mixed, with US equities struggling towards the end of the session, particularly tech stocks. The VIX still fell though, down to 27.50%, its lowest close since the start of May.
• US yields fell, aiding the AUD via yield differentials, as the US Empire manufacturing index came in much weaker than expected (-11.6, versus 15.0). Still, as we highlighted yesterday, short-term correlations with yield differentials remain fairly low at present.
• Commodities were firmer, although energy (Brent crude to +$114/bbl) and agricultural were the main sources of strength. Base metals were still up modestly, while iron ore pushed back towards the $130/tonne mark, despite yesterday's weak China data.
• Today the focus will be on the RBA's May meeting minutes, although how much new information is gleaned on the rate outlook remains to be seen. RBA thinking on wages will be in focus. Also out is the ANZ weekly consumer sentiment print.
• Technical studies remain bearish, with AUD/USD gains deemed to be corrective. Resistance at 0.7054 still eyed, while support comes in at 0.6829.