A$ Hit By Weaker NZD, Base Metals Slump

AUD/USD fell just over 1% for Wednesday's session, dragged down by the 2% drop in NZD. NY session lows came in around 0.6530, with weaker equity market sentiment weighing on higher beta FX. For the A$ we now sit just below 0.6550, fresh lows back to the first half of November last year, with key support at 0.6565, the March 10 low, broken.

• The focus shifts to the 0.6403 Fibonacci retracement in terms of technical downside targets. On the upside, a breach of 0.6818 is required to reinstate a bullish theme. Initial firm resistance is seen at 0.6697, the 50-day EMA.
• Outside of NZD weakness, commodity indices were another drag on the A$, with the aggregate Bloomberg index losing a further 1.8% for Wednesday's session. The aggregate index was close to flat, thanks in part to higher oil prices.
• Copper was noticeably weaker, down 2.4%, while iron ore sits comfortably off recent highs, back sub $97/ton.
• The data calendar is empty today for Australia, retail sales for April are out tomorrow.
• Late yesterday in the Asia Pac session, the RBA's Head of Domestic Markets David Jacobs gave a speech in Tokyo on Australian Fixed Income Markets, part of which discussed how the RBA's balance unwind is impacting markets (see this link for more details).