AUSD/USD Falters Above 0.6900 Again

AUD/USD is not too far away from weekly lows, sitting around 0.6845 currently. Once again, the currency couldn't sustain gains above 0.6900 overnight. Month end was dominated by higher core yields and equity market weakness, although the backdrop for key central bank outlooks remained hawkish, particularly from an ECB standpoint.

• The A$ was around mid range compared to the rest of the G10 bloc in the past 24hours. AUD/EUR continues to retreat lower though. The pair now sits back close to 0.6800. Expectations for a 75bps hike by the ECB continue to firm, post CPI data overnight.
• Note the 50-day MA comes in at 0.6783. We haven't been below the 50-day MA since early July.
• Even with the weaker equity market tone, the VIX shifted down slightly to sub 26%. AUD/JPY traded fairly tight ranges post the Asia close, holding above 95.00 for the most part (last slightly higher at 95.20/25).
• Commodities, in terms of the aggregate Bloomberg index, fell by 0.75%, while base metals were off by the same amount. Iron ore edged higher though, recapturing the $100/tonne handle.
• The AU-US 2yr spread continues to trend lower, now sitting in the -45/-50bps range.
• Today's domestic data calendar includes the final reading for the manufacturing PMI for August (last was at 54.5). Capex is also out for Q2, (another building block for GDP next week), with the market looking for a +1.0% rise. July home loans data is also out. The market looks for a continued correction (-3.5% forecast, versus a -4.4% dip last month).