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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
AUD
A$ correlations have remained elevated over the past week. This is evident across yield spreads, particularly at the short end, as well as with global commodities and equity trends.
- The table below plots correlations for the past week and month across these traditional key macro drivers.
- The yield spread correlation has likely remained elevated given US moves post the CPI print/Fed commentary this week. Note next week contains some important AU event risks, RBA minutes are out Tuesday, followed by Q2 wages on Wednesday. Then on Thursday is jobs data for July. The wages/jobs mix arguably carries the most domestic risk that can shift the AU yield outlook.
- The correlation with global commodities remains strong, as it was last week, but less so iron ore, where prices have been more range bound, while the A$ has continued to rally this past week.
- The currency is also back in lockstep with global equity sentiment, see the chart below, after a brief divergence through early August.
Table 1: AUD/USD Correlations
| 1wk | 1mth | |
| 2yr yield differential | 0.94 | 0.31 |
| 5yr yield differential | 0.76 | 0.16 |
| 10yr yield differential | 0.46 | 0.01 |
| Global commodity prices | 0.85 | 0.86 |
| Iron ore | 0.18 | 0.63 |
| Global equities | 0.90 | 0.85 |
| US VIX index | -0.83 | -0.83 |
Source: MNI - Market News/Bloomberg
Fig 1: AUD/USD & Global Equities
Source: MNI/Market News/Bloomberg
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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