AUD/USD Recovery Continues, Firmer Equities/Metals Aiding

The A$ rebound from Thursday has extended in the first part of Friday dealing. The currency last near session highs in the 0.6445/50 region (+0.30%). A$ is lagging NZD gains (+0.50%), but outperforming the rest of the G10 bloc. Last Friday highs in AUD/USD sit at 0.6465, but we have to get above 0.6520 to challenge the bearish backdrop from a technical standpoint.

• Cross asset signals are helping AUD. Regional equity sentiment is mixed but HK markets have opened up much higher (a reminder China markets are closed for the Golden Week holiday). The HSI last near +1.60% higher.
• Helping sentiment in the developer space has been reports that Shenzhen plans to relax the floor for mortgage rates for first home purchases.
• Iron ore has also continued to recover, last near $120/ton, mid September highs were near $124/ton. Copper is up a further 0.50%.
• On the data front, private sector credit, was a touch above expectations, +0.4% m/m (0.3% forecast). The AU-US 2yr spread has narrowed further, back near -97bps, fresh highs back to mid-August.