AUD, NZD Weakness Persists as DXY Returns to Flat

AUD and NZD remain the poorest performers across G10 headed into the London close, with price action persisting after the softer-than-expected China GDP and accompanying downgrade in growth forecasts for the remainder of the year.

• AUDUSD traded as low and 0.6788, just 4 pips above last Thursday’s low, and looks set to close lower for a second consecutive session. Despite the apparent shift in risk mood, a continued uptick in most US and European equity indices could limit losses in AUD and NZD.
• A stronger dollar on the back of the Empire Manufacturing beat provided a further headwind to risk proxy FX and saw EURUSD return close to flat having printed a fresh cycle high of 1.1249 earlier today. The greenback bounce mirrored a recovery in 10y yields, which returned to Friday closing levels - helping the USD Index briefly pierce the 100 level before fading back to flat.
• Overall, price action has appeared largely consolidative ahead of retail sales and housing data due later in the week.