A$ Down On China Covid Concerns, Broad USD Strength

AUD/USD is now down 0.50% from closing levels last week. We last tracked at 0.6825. If we see further downside, be mindful of Friday's overnight lows of just under 0.6800.

• China concerns around the Covid outlook is a catalyst for AUD weakness, although we are seeing a strong USD across the board.
• Iron ore is weaker, down through $110/tonne but some support has emerged, while oil is also giving back earlier gains, likely on demand concerns.
• China related equities are all weaker. Covid concerns weighing, along with fines for tech related companies.
• US equity futures are also lower, but this isn't driving material A$ weakness against safe havens at this stage. Yen is down by slightly more than the AUD since the open, leaving AUD/JPY slightly higher on the day (last 93.50).
• AU yields have pushed higher but not to the same extent as the US yield bounce from Friday. The AU-US 2yr spread was last at -49bps, near recent lows.