AUD/USD Dips, But Ranges Remain Tight

AUD/USD drifted lower post the Asia close, dipping as far as 0.6953 late in NY trading. We currently track a little firmer at 0.6965, but the A$ was the worst performing G10 currency over the past 24 hours. Topside moves ran out of steam around 0.6995.

• Equity weakness in US markets, led by the tech sector, dented A$ sentiment in late trading, although AUD/JPY losses were fairly well contained. This pair sits just above 94.10 currently, with dips sub 94.00 supported overnight. The VIX index edged slightly higher to 21.80% but overall remains within recent ranges.
• US yields firmed, led by the front end as wages data (unit labor costs) were stronger than expected, the 2yr up +6bps to 3.27%, which drove a flatter 2/10s curve. There should be some catch up from AU yields today, but the AU-US 2yr spread has been unable to get much beyond -50bps on the topside since the start of this week.
• Commodity indices mostly tracked higher, higher natural gas prices offset a modest decline in the oil space. Copper and iron ore were relatively steady though, with the latter holding around $110/tonne. Gold continued to recover moving above the 50-day MA to $1794.
• The precious metal outperformed higher US real yields and a relatively steady overall DXY trend.
• The domestic data calendar is empty for Australia today.