A$ Rebound Falters Amid US Yield Recovery, Focus Remains On Test Sub 0.6400

AUD/USD spent most of the post Asia close tracking lower through Thursday trade, getting to 0.6415/20, against earlier highs in the 0.6455/60 region. We sit near 0.6420 in early Friday dealings, having lost around 0.20% for Thursday's session. Broader USD sentiment recovered somewhat as the US session progressed, up 0.14% for the BBDXY, but remaining sub recent highs.

• A bottoming-out of US yields followed comments from Fed's Williams, who stressed that he sees no urgency in pressing the Fed toward cutting interest rates, and that policy is in a "good place", was the main catalyst for the USD turnover through Thursday trade.
• US cash Tsy yields finished 3-6bps higher, with a slightly stronger tone for the front end of the curve. Fed rate cut expectations for 2024 were also pared. In the equity space, US markets finished down slightly (SPX -0.22%), helping to offset a positive lead from EU markets.
• Commodities were down slightly for the Bloomberg aggregate index (-0.1%), while the metals sub index outperformed up 1.36%. Iron ore sits off recent highs, last under $115/ton. Copper was up +2.35% for the active CMX contract.
• AUD was mid range from a G10 standpoint in Thursday trade, with only CAD recording a slight rise against the USD. For AUD/USD focus remains on the downside, with 0.6389 the Apr 16 low. Beyond that lies 0.6339 the Nov 10 2023 low. The 20 and 50-day EMAs sit above 0.6500.
• The local calendar is empty until next week, with the CPI release on Wednesday (for Q1) the key event. Note in the option expiry space, we have the following for NY cut later: $0.6400-20(A$2.0bln).