A$ Bounce Runs Out Of Steam On Cross Asset Headwinds

AUD/USD spent most of the post Asia closing pushing higher, but conviction levels were low. We ran out of steam ahead of 0.6920 and track around 0.6900 in early trade today. The A$ has seen some underperformance against other G10 FX over the past 24 hours.

• Cross asset signals were negative for the A$. US equities fell, while the VIX index edged up to 28.7%, although we did get as high as 30.25%. AUD/JPY is back to 93.70, but dips back sub 93.50 are still supported.
• Commodities fell quite sharply, the Bloomberg spot index off by -4.28%. A lot of focus on lower oil prices (Brent sub $110/bbl), but base metals also fell by -3.11%.
• Copper closed below earlier June lows at $371.45. The metal lost 13.54% in June. Iron ore was also weaker, down to $115/tonne, versus recent highs of $122-$123.
• Nominal yields fell sharply, aided by the commodity moves. Larger moves seen in the EU relative to the US. The AU-US 2yr touched -42bps in early trading yesterday, but pushed back towards -36bps as the session progressed.
• Earlier, house price data for June showed a -0.8% decline in MoM terms. Later we get the final PMI manufacturing reading for June, along with RBA commodity prices.