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AUD Downtrend Accelerates as US Curve Inverts Further

FOREX
  • Currency markets are more stable at the NY crossover despite a shakier start - a move which resulted in fresh highs for the greenback during Asia-Pac trade. The fresh high for the USD Index extends the currency's February winning streak, putting prices within range of 105.631, the January and YTD highs.
  • Fixed income markets have been the focus so far this week, with yields at the belly of the curve seeing further upside pressure and putting the German 10y yield at the highest level since the wake of the Global Financial Crisis in 2011. In the US, curve inversion persists, with the short-end selling off at a faster pace to put 2yr yields higher by 3 bps vs 10y yield's 1.5bps gain.
  • GBP/USD's pullback low at 1.1923 found support ahead of the mid-February low at 1.1915 and staged a respectable recovery back above the 200- and 100-dmas at 1.1928 and 1.1950 respectively.
  • The poorest performers across G10 are AUD and NZD, which has resulted in an extension of the AUD/USD downtrend posted last week. AUD/USD has now solidly broken through 100-dma support at 0.6729, putting the pair at the lowest levels since January and within range of YTD lows at 0.6688.
  • Prelim durable goods orders and pending home sales for January. The central bank speakers slate should prove to be of interest, with Fed's Jefferson, ECB's de Cos and ECB's Lane on the docket.
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