AUD/USD Hits 0.6365 Before Stabilizing Somewhat

The AUD is the weakest performer in the G10 space. We hit a low of 0.6365 not long after the weaker than expected employment data. This was the bottom end of the range inferred by overnight implied vol (0.6366-0.6479). We sit slightly higher now, last near 0.6380, but still very much focused on downside pressures. The Nov 10 2022 low at 0.6285 is the next potential downside target. Resistance is at 0.6522, high from Aug 15, and 0.6593, 20-Day EMA.

• Yield differentials remained skewed against the AUD, although we have seen a break away from recent ranges. The AU-US 2yr government bond yield spread not too far away from -100bps at this stage. Swap rates are above post jobs data lows.
• Headwinds remain from the negative equity lead in terms of the Asia Pac region and US futures, although we are away from session lows. AUD/JPY got close to 93.20, but sits slightly higher now, last around the 93.40 region.
• Commodities are generally softer, although iron ore futures are holding above $100/ton at this stage.