June 21, 2022 05:38 GMT
AUD/USD has drifted lower through the afternoon session, currently at 0.6955/60, down from earlier session highs of +0.6980. Note the pair couldn't breach the 0.7000 level yesterday.
- A sharp move lower in front end yields (2yr off by 12bps) has weighed noticeably on the AU-US yield spread. We started the day at +10bps but look set to finish it around -8bps.
- RBA Governor Lowe stated the central bank is considering hikes in the 25 or 50bps magnitudes (and not larger). This, coupled with his doubts around year RBA market pricing, has been a clear driver of today's trends in the rates space.
- Offsets have come from higher equities, with US futures pointing to solid open when trading resumes this evening. Regional equities are also higher.
- Commodities have also recovered some ground, with iron ore back above $115 at one stage, but we are back at $113 now. Oil is also firmer, while copper has been steady.
- Tomorrow's data calendar has the Westpac Leading Index, while Thursday sees the preliminary PMI prints for June.