AUD/USD Again Finds Support Ahead Of 0.6760

AUD/USD traced out a rough 0.6760/0.6825 range post the Asia close. We again found support ahead of the 0.6760 level, the third time we have bounced from this region in recent sessions. Cross asset drivers were mixed. AUD/USD started the start slightly above the 0.6780 level.

• Broader USD sentiment was still supported, as the DXY pushed above 107.0. EUR/USD fell below 1.02, with the A$ still outperforming the EU FX bloc.
• Equity sentiment was positive overnight, although more so in the EU than the US. US equities did finish firmer into the close though (+0.36% for S&P500), while the VIX closed down sub 27.
• US yields rebounded strongly, better US data for service sector PMIs/services ISM helping. The 2yr and 3yr yield both climbed back above 3%. The FOMC mins didn't shed a lot of light on the outlook but stated a restrictive stance would be appropriate with 50bps or 75bps on the cards at the next meeting.
• If we see AU 2yr yields hold at yesterday's close it would imply the AU-US2yr spread sits at -56bps. We should see some AU yield recovery today, but the trend still favors USD at this stage.
• In the commodity space, Bloomberg aggregate indices continued to fall, although not at the same pace we saw from the previous session. The aggregate index fell 1%, as Brent crude dipped sub $100/bbl.
• Base metals were off by 0.65%. Iron ore is around $111.5//tonne, up from yesterday's sub $108/tonne levels.
• Today May trade data prints, Exports are expected at +2% (versus +1% previously), while imports are forecast to rise 3% (versus -1% previously). The trade surplus is forecast at A$10825mn, little change from the previous month.