A$ Holding Above 0.6500, Technical Backdrop Still Bearish

AUD/USD tracks near 0.6520 in early Wednesday dealings. The pair rose 0.34% for Tuesday's session, the second best performer in the G10 space (NOK rallied 0.93%). The A$ was supported by yesterday's hawkish RBA hold, along with the better tone to global equities, particularly in US markets.

• Even with yesterday's rise, the technical backdrop for AUD/USD remains bearish. Monday’s low print highlights a test of key support at 0.6463, the Apr 19 low. A clear break of this level would reinforce a bearish theme and signal scope for an extension towards 0.6339, the Nov 10 ‘23 low. Initial resistance is at 0.6560, the Aug 1 high.
• AUD/USD looks too low relative to elevated AU-US short term rate differentials, with the 1yr ahead (3 month differential) back at +40bps. Still, broader risk trends remain a key driver, along with relative monetary policy outlooks.
• AUD/JPY has stabilized, aided by the broader equity backdrop, but the pair hasn't made headway beyond 95.50. We last tracked near 94.25 in early Wednesday dealings.
• In the commodity space, iron ore and copper were relatively range bound, although active SGX iron ore is off its recent highs (last under $102/ton).
• Coming up shortly we have NZ Q2 employment data, which could influence the AUD/NZD cross (last 1.0950/55, off post RBA highs above 1.1000).
• Also note at 9am local time, RBA Assistant Governor Hunter testifies before the Senate on cost of living.