A$ Underperforms On Debt-Ceiling Driven Risk Pullback

The Aussie underperformed the G10 as risk sentiment deteriorated following no progress at the latest Biden-McCarthy debt-ceiling meeting. AUDUSD fell 0.6% and is currently trading around 0.6611. The USD index is 0.3% higher.

• AUDUSD continues its softer tone and key support lies at 0.6565, the March 10 low. A breach of this level would confirm the resumption of the bear cycle started February 2. A break of 0.6818 would reinstate a bullish theme.
• Aussie is steady against the kiwi ahead of today’s RBNZ meeting, where another 25bp hike is expected. It is currently around 1.0575. AUDJPY is down 0.6% to 91.62. AUDGBP is down 0.5% to 0.5324 and AUDEUR -0.2% to 0.6138.
• Equity markets were weaker with the S&P down 1.1% and the Eurostoxx -1%. The VIX was over a percentage point higher to 18.5%. Despite the pullback in risk, oil prices rose strongly. WTI is up 2.2% to $73.65/bbl. Cooper is 1.2% lower and iron ore fell below $100/t and is around $99.
• Today the Westpac leading index for April prints and then at 1710 AEST the RBA’s Jacobs, Head of Domestic Markets, speaks at the Australian Government Fixed Income Forum in Japan.