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Is This AUD Break Of 0.6900 More Sustainable?

AUD

AUD/USD is faltering, down 0.50% from NY closing levels and sub 0.6900. It is underperforming on a cross basis, most notably against the yen. AUD/JPY is through overnight lows 93.60/70, last tracking below 93.50.

  • Broader risk appetite is under pressure. US equity futures are back in negative territory.
  • AU yields have sunk, following the US lead from overnight. The AU-US 2yr spread is back to yesterday's lows around -18bps.
  • Commodities are also weaker. Iron ore is back beneath $110/tonne. Copper has slipped a further 2.2% to $385/lbs. We are back to early 2021 lows now. Brent crude is also under pressure, sub $109/bbl.
  • Dips in AUD/USD sub 0.6900 back in mid-May and earlier in June proved to be good buying opportunities for the A$.
  • Valuation arguments are no doubt still supportive for the AUD, but weakening commodity prices on global growth/recession fears appear more heightened now and may present more of a headwind for the currency compared to these earlier episodes.
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