AUD/USD Dragged Higher

AUD/USD has been dragged higher on the back of broader USD softness and higher NZD/USD levels as the session has progressed. Dips sub 0.7000 are still supported for now, and we last tracked around 0.7020. To be fair though, the AUD/NZD cross has rebounded nicely from earlier lows. The cross is back above 1.1040, up from earlier lows of 1.0990. The 2yr swap spread has moved away from post RBNZ lows, from -63bps to -58bps. Whilst AU wages disappointed earlier, a number of local banks are still pencilling in a 50bps rate hike at the September RBA meeting. There was a dip in futures pricing dipped post the wages print but we are now basically back to unchanged levels (just above 2.20% for the Sep RBA meeting).

• In terms of other cross asset drivers, outside of Korean equities, regional bourses are higher, although the lead from US equity futures has been indifferent.
• Commodities have been mixed, with oil and copper edging higher but iron ore is down to a $103/tonne handle, which is -2.5% for the session. This comes despite positive onshore China equity market sentiment, particularly in the property sector (+1.65%). The 2 series don't always move in sync though.
• Note tomorrow the focus shifts to the July jobs report in Australia. The market expects 25k in jobs growth (versus 88.4k previously), and an unchanged unemployment and participation rate (3.5% and 66.8% respectively).