A$ Slumps On Higher Core Yields & Weaker Commodities, Jobs Data On Tap Today

The A$ faltered noticeably late yesterday and into the London/EU cross over. The pair dipped below 0.7000 not long after the UK CPI release, falling all the way down to the low 0.6910/15 region before support kicked in. We rebounded back above 0.6960 late in NY trading, as US yields moved off their session highs (as the FOMC minutes were interpreted on the dovish side), but we currently track lower at 0.6935/40. Note the 50-day MA comes in at 0.6923 today.

• Key support for the currency is at 0.6870, the August 5 low. A break below this level would alter the technical set up for AUD/USD.
• The move in UK/EU short end yields was very sharp overnight. 2yr yields moving +24bps in the UK, +15bps in Germany. Such moves appeared to weigh on A$ sentiment, particularly in the cross space, with the currency the worst performer in the G10 FX space over the past 24 hours.
• AUD/EUR fell by 1.30% and is back to the low 0.6800 region, while AUD/GBP dipped 0.85% to 0.5755/60. AUD/JPY is down from levels that prevailed this time yesterday, back to 93.70, although some support is evident around 93.60 (50-day MA at 93.74).
• Ultimately lower US equities weighed on this pair, while the VIX edged up but closed sub 20%, in a volatile overnight session.
• Weaker commodities (ex oil) didn't help A$ sentiment either, with base metals -1.45%, while iron ore dipped below $102/tonne before support kicked in. This metal is off around 14% from late July highs.
• Today the focus is on the July jobs data. The market expects 25k in jobs growth (versus 88.4k previously), and an unchanged unemployment and participation rate (3.5% and 66.8% respectively).