Commodity Currencies Hold Their Own, Watch AU Employment Report

AUDUSD traded lower overnight as the USD rallied due to yields hitting new cycle highs on hawkish Fed speak and inflation worries. It reached a low of 0.6251 before trading back to 0.627. DXY ended the day up 0.7%.

• All G10 currencies were down against the USD but the commodity currencies fared better than the European space. The AUD was the fourth best performer but underperformed the NZD. AUDNZD trended down further overnight and is now trading around 1.106. AUDJPY was also down but has recovered somewhat to about 94.0.
• Equity markets were mixed overnight with the US trading lower (S&P500 -0.7%) but the Eurostoxx +0.2%, however some European bourses were down. The VIX bounced around during the session and ended at 30.77%.
• Oil prices rallied on EIA data showing a US crude inventory drawdown of 1.725mn barrels, whereas a build of over a million barrels was expected. WTI is up 3.3% and back above $85/bbl. Copper prices were down 1.1%, as global growth worries weigh on markets. Iron ore was lower again at $91.45 on Chinese demand concerns.
• Today the September labour force report will be watched closely as this is an area that the RBA is monitoring carefully. An increase in employment of 25k is expected and the unemployment rate should be unchanged. Fed’s Jefferson and Cook speak tonight.