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A$ Avoids Break Of 0.6900, Equity & Commodity Sentiment Remain Key

AUD

AUD/USD is up from the lows, basing ahead of 0.6910, to be back close to flat on the day. AUD/JPY has rebounded from sub 90.00 and is back close to 50 day MA at 90.57

  • Better tone for US equity futures and key Asia Pac equity indices is the main driver of the turn around.
  • Commodities still generally soft. Iron ore around $125/tonne in Singapore.
  • Correlations with yield spreads lower compared to last week, now that RBA is behind us. Correlations with commodities and equities remain quite high though, see the table below.
  • Domestic data upbeat in terms of NAB survey (particularly business conditions) and slightly better than expected Q1 retail sales. Not a big driver of sentiment in the near term though, given the weaker near term correlation for yield spreads.

Table 1: AUD/USD Correlations

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AUD/USD is up from the lows, basing ahead of 0.6910, to be back close to flat on the day. AUD/JPY has rebounded from sub 90.00 and is back close to 50 day MA at 90.57

  • Better tone for US equity futures and key Asia Pac equity indices is the main driver of the turn around.
  • Commodities still generally soft. Iron ore around $125/tonne in Singapore.
  • Correlations with yield spreads lower compared to last week, now that RBA is behind us. Correlations with commodities and equities remain quite high though, see the table below.
  • Domestic data upbeat in terms of NAB survey (particularly business conditions) and slightly better than expected Q1 retail sales. Not a big driver of sentiment in the near term though, given the weaker near term correlation for yield spreads.

Table 1: AUD/USD Correlations

Keep reading...Show less