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AUSD/USD Close To 0.7000, But Underperforms Yen

AUD

The A$ was the third best performer in the G10 space for Thursday's session, amid broad USD weakness. AUD/USD finished close to 1% higher, breaking above recent highs, touching 0.6985, before edging back down. We currently track just under 0.6970.

  • Trading over the US CPI release was volatile but ultimately lower core rates prevailed (-7.5bps to -12bps lower across the curve in the US), while equity markets posted modest gains (SPX +0.34%).
  • The print came in line with expectations but continued to show cooling momentum, which appeared to be enough for markets to continue with this week's bullish risk-on tone.
  • The US VIX index sank, now back to its lowest levels since early April last year, sub 19%. AUD/JPY though faltered, as the A$ trailed JPY meaningfully, with yen the dominant performer in the G10 space (+2.5% against the USD). This pair is back to the low 90.00 region, with lower core yields and speculation around next week's BoJ meeting continuing to drive yen sentiment.
  • Commodity markets remained on the front foot, base metals up a further 0.9%, while the Bloomberg aggregate index rose by around 1.25%. Iron ore is close to $123/ton.
  • AUD/NZD continues to press higher, the pair now back close to the 1.0900 level.
  • On the data front, home loans for Nov are out today. The market expects -2.0% m/m, versus -2.7% prior.
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