Crosses Remain In Focus

AUD/USD is very close to where it was late yesterday, just above the 0.6990 level. The overnight session saw a range of 0.7014 to 0.6955. Again though greater focus was cross performance, particularly AUD/JPY. This pair lost over 2% from recent highs (95.70 to around 93.55). We have stabilized somewhat, currently tracking closer to 94.00.

• Focus is likely to rest again today on AUD/JPY, we aren't too far away from the 50-day MA at 93.56, where support was evident overnight. Note yesterday yen demand kicking off yesterday around the Tokyo fix. This pair continues to diverge from higher US equity futures, as we highlighted late yesterday.
• Yen has comfortably outperformed all comers in G10 FX over the past 24 hours, as lower US yields (with the US recording a second quarter of negative growth overnight) outweighed further improvement in equity sentiment.
• AUD/EUR spiked to 0.6890 on disappointing EU confidence data early in the overnight session but we are now back to 0.6855/60.
• AUD/NZD slid further though, dipping back to sub 1.1100, before support kicked in. We currently trade at 1.1115/20. Relative yield differentials suggest we could see further downside in the cross in the near term.
• Commodities were mostly higher, base metals up 1.66% according to the Bloomberg index, while aggregate commodities gained a more modest 0.29%. Iron ore momentum ran out of steam ahead of $120/tonne.
• Note on today's calendar is Q2 PPI, along with June private sector credit. The market expects a +0.7% MoM rise, which would leave the YoY pace at +9.0%.