A$ Underperforms On Risk Off Move & Lower Iron Ore Prices, GDP Coming Up

Risk-sensitive currencies underperformed on Tuesday as the S&P fell sharply. Aussie underperformed the G10 as it faced additional headwinds from lower iron ore prices. AUDUSD fell 1.2% to 0.6711, close to the intraday low of 0.6708. The USD index rose 0.2%.

• Yesterday’s sharp drop in AUDUSD is seen as corrective and the bull cycle remains intact, as last week the pair exceeded the bull trigger at 0.6799. It has broken below the 20-day EMA of 0.6714, which opens up 0.6670 50-day EMA, and is currently still below this level at 0.6713.
• With the yen outperforming on the risk pullback mood and lower US yields, AUDJPY fell 2.1% to 97.63. The pair had trended lower through the day.
• AUDNZD fell 0.5% to 1.0849 after a low of 1.0843. AUDEUR is 0.9% lower at 0.6078 and AUDGBP -0.9% to 0.5119.
• Equities sold off sharply with the S&P down 2.1% and Euro stoxx -1.2%. Oil prices sank with Brent -4.9% to $73.75/bbl. Copper is 2.9% lower and iron ore $93-94/t.
• Today Q2 GDP prints and Bloomberg consensus is forecasting a moderate increase of 0.2% q/q and 0.9% y/y. There are also final August Judo Bank composite/services PMIs and July household spending.