A$ Recovers Ground On Crosses

The A$ has been the outperformer in the Asia session so far. AUD/USD is at 0.6960, around 0.50% above NY closing levels.

• AUD/JPY is up from the 93.00 level to 93.70. A 0.7% gain, following a cumulative 3.6% dip in the past 3 sessions. Higher equity futures for US markets (+1%) and BoJ's step up in bond operations the main catalysts for this cross. Asia Pacific equities remain weak but are off worse levels for the most part.
• Earlier, NAB business survey data painted a fairly resilient picture for the Australian economy. 16 on conditions, versus a revised 19 in April, while confidence fell to 6 from 10 last month. As a note the business conditions trough point was close to -40 in March 2020.
• For RBA watchers though, the wages component of the NAB survey slipped. The labor cost index measure fell from a high of 3.00 back to 2.55.
• AU yields have still spiked strongly. This is in line with the overnight trend, but the 2yr is up over 38bps to 3.08%. This has helped arrest the decline in AU-NZ yield spreads and in turn the AUD/NZD cross has stabilized. The AUD/NZD cross got close to 1.1100, but is now back at 1.1070. Support appears evident around the 1.1060 level.