AUD/USD dipped as far as 0.6869 post the bumper US payrolls report on Friday evening. We rebounded back above 0.6900 by the close though. We track slightly weaker in early trade today, last at 0.6905, versus Friday’s NY close of 0.6911. AUD/JPY rebounded more than a full big figure post payrolls (92.40 to 93.60), before settling back around 93.30. The pair is up slightly this morning on the back of fresh yen weakness (last 93.40/45).
- Cross asset signals were clearly a negative from a US yield standpoint, which pushed the USD higher across the board.
- The early focus will be on AU-US spreads, note the 2yr spread hasn't spent much time below -60bps this year. AU yields will rise today, but are unlikely match US moves from Friday (US 2yr +18bps to 3.225%). As we noted last Friday, yield spreads were a bigger driver of the AUD/USD through last week from a correlation standpoint.
- Equities were volatile, edging down slightly in terms of the S&P500 and Nasdaq, but the VIX still declined a little further to 21.15%, fresh lows back to April for this metric.
- Commodities were mostly higher, oil up (Brent edging back to $94.90/bbl), while gold fell. Copper gained +2% (CMX) to $355, while iron ore recovered to $112/tonne.
- China trade data for July beat expectations over the weekend, although in USD terms, imports were a touch weaker than expected (+2.3% YoY, versus +4.0% expected).
- The AU data calendar is light today, just FX reserves data on tap.
- From a technical standpoint, the July 21 low of 0.6859 is something be mindful of in terms of downside support. On the topside is 0.6990, the August 4 high. Also note the 50-day MA comes in at 0.6949.