AUD & NZD Outperform Amid Continued USD Pull Back

The dollar correction, which commenced on Wednesday has continued through the first part of Thursday trade. The BBDXY is off a further ~0.25%, last near 1272.40. We are below Wednesday lows for the index, but still tracking higher for the week.

• A further decline in US yields has been a key driver of sentiment. US yields off 2.5bps for the 10yr to 4.71, with fairly consistent moves lower across the curve. Equity sentiment has improved, with all major regional Asia Pac indices higher, while US equity futures recouped earlier losses.
• AUD/USD has been the best performer, up 0.75% to 0.6375/80 in latest dealings. Commodity prices have been relatively steady, so this looks to be more of risk-on equity led move. A slight better trade surplus position for August, aided by higher exports has also helped.
• NZD/USD is back to 0.5950, up ~0.60%, the second best performer in the region.
• USD/JPY slumped through Wednesday lows, getting to 148.26, but sits higher now, last near 148.45/50. Exporter USD selling was cited as a positive, while Japan PM stated to local unions he will strive to make wage gains sustainable per wire reports (BBG, RTRS).
• EUR/USD is +0.20%, last near 1.0525.
• Looking ahead, the Fed’s Mester, Kashkari, Barkin, Daly and Barr all speak. The ECB’s Lane and de Guindos also appear. Ahead of Friday’s payrolls US jobless claims and Challenger job cuts for September are released and there is also August trade data.