AUD Looks To RBA For Cues, JPY Struggles

AUD price action was a function of wild gyrations in short-term ACGB yields, driven by speculation surrounding potential for the RBA to purchase debt in defence of its 3-year yield target. The Reserve Bank skipped purchases today, prompting short-term ACGB yields to retrace most of their initial losses, with the AUD moving away from session lows as a result.

• That being said, both Antipodean currencies continue to lead losses in G10 FX space as U.S. e-minis have edged lower, a sign of souring risk appetite. Underwhelming earnings reports from Amazon and Apple may have weighed on equity futures.
• The yen struggles for any topside momentum, after Japan's industrial output and Tokyo CPI both missed expectations. Political uncertainty is elevated ahead of Sunday's general election, after latest polling showed the LDP is on the defensive in its fight to keep sole control of the legislature. USD/JPY 1-week implied vol hit fresh multi-month highs this morning.
• The European data docket today includes flash GDP data from the EZ, Germany, France and Italy. In NY hours, focus will turn to U.S. PCE, personal income/spending, MNI Chicago PMI as well as Canadian GDP.