AUD/JPY Surges On Better Equity Sentiment

AUD/USD is not too different from where Asia markets left it yesterday. We sit around 0.6970 currently, after a range of 0.6935-0.6994 post the Asia close.

• AUD/JPY has been the big mover, with the pair pushing back up to 95.25/30, highs back to June 10. We are up +1.43% in the past 24 hours for this pair.
• This owes mainly to USD/JPY breaking higher through to 136.60 (135.50 had previously capped the pair). Better risk appetite in equities, US stocks +2%, plus a lower VIX to 30.20%, drove yen underperformance against higher beta FX.
• For commodities, iron ore couldn't stay above $115, but we aren't too much weaker at $114 for today. Copper also edged higher by 0.64% to 403.90/lbs. Oil was range bound post the Asia close, but remains close to $115/bbl.
• US yields were steady at the front end, but higher in the 10yr (+4.9bps to 3.275%). The AU-US 2yr spread fell back into negative territory yesterday after Lowe's speech, which appeared to rule out a more aggressive rate hike at the July policy meeting, i.e. larger than 50bps.
• The data calendar is light today, with just the Westpac Leading Index out. Tomorrow, preliminary PMIs print for June. While on Friday, RBA Governor Lowe is on a panel discussion, with central banks and inflation the topic.
• From a technical standpoint, support is seen just below the 0.6900 level (the June 17th low), while 0.7069, the June 16th high is seen as resistance.