AUD Undermined By RBA Comments

Participants read RBA Gov Lowe's speech as dovish and shied away from AUD, which landed at the bottom of G10 pile. Lowe flagged Australia's higher relative 10-Year yield vs. global peers and failed to rule out ACGB purchases in the 5-10 Year sector, while signalling that the RBA will focus on actual inflation rather than the outlook and won't be satisfied by just progress towards full employment. AUD/USD crossed below support from Oct 13 low of $0.7150 as the Aussie went offered across the board, amid rising RBA easing bets. Australian labour market report triggered but a limited knee-jerk higher, as the unemployment rate ticked higher to 6.9% from 6.8%, but printed below the expected 7.0%.

• AUD weakness has spilled over into NZD, to some modest degree. AUD/NZD approached support from Sep 25 low of NZ$1.0718, but has failed to test the level as of yet.
• GBP has edged higher as the timezone has played catch-up to reports suggesting that the UK might continue Brexit talks with the EU beyond the self-imposed deadline, set for today. As a reminder, the key European Council summit convenes today and EU leaders will discuss the matter.
• JPY has softened into the Tokyo fix, possibly on the back of Gotobi day flows.
• Going forward, focus falls on Chinese inflation figures, U.S. initial jobless claims, Empire M'fing & Philly Fed Survey, Swedish unemployment and comments from Fed's Bostic, Bullard, Quarles, Kaplan, Barkin & Kashkari, ECB's Lagarde, BoC's Lane & BoE's Cunliffe.