A$ Underperforms As Risk Pullback Weighs On Commodities

Aussie underperformed the G10, except for NOK and SEK, against the USD on Monday, on the pullback in risk sentiment and commodity prices. All G10 currencies were lower against the USD as the DXY rose 0.3% on higher UST yields. AUDUSD broke through 0.7100 and is currently around 0.7060, close to the session low of 0.7051.

• Despite Monday’s correction, AUDUSD remains in an uptrend with higher highs and higher lows. But on the downside, initial support is at 0.6994.
• AUDNZD is down 0.2% to 1.0916. Aussie is 0.2% weaker against the yen and is currently around 92.10. AUDEUR is down 0.5% to 0.6507 and AUDGBP -0.3% to 0.5717.
• Equity markets were generally softer with the S&P down 1.3%, Nasdaq -2.1% and Eurostoxx -0.5% but FTSE up 0.25%. A deterioration in risk appetite put pressure on commodities with WTI oil prices down 2.4% to $77.80/bbl despite reports of significantly higher travel in China for New Year. Copper prices fell 1% and iron ore is down around $2 to just over $126/t.
• Today December retail sales print in Australia. After November’s outsized 1.4% increase, a moderate 0.2% pullback is expected. The RBA’s private credit series are also released and the headline is forecast to post another 0.5% m/m rise.