Lowe's Speech Sends AUD Diving

RBA Gov Lowe's speech was widely interpreted as dovish and AUD went offered across the board as participants ramped up RBA easing bets. Lowe failed to rule out ACGB purchases farther out along the curve (he specifically mentioned the 5-10 Year sector) and flagged Australia's higher 10-Year yield relative to its global peers. RBA chief added that the Bank will focus on actual inflation rather than the outlook and wants to see something more than just progress towards full employment. Australia's labour market report wasn't as bad as some feared, with unemployment ticking higher to 6.9% from 6.8%, falling short of the expected 7.0%. AUD reacted with just a limited, brief knee-jerk higher, as earlier RBA rhetoric continued to take centre stage. AUD/USD crossed below support from Oct 13 low of $0.7150, while AUD/JPY slid into the Y75.00-Y74.93 support zone.

• AUD weakness spilled over into NZD, to some degree, with NZD/USD probing the water under yesterday's low. AUD/NZD approached support from Sep 25 low of NZ$1.0718, but failed to attack the level.
• Downticks in all three main e-mini contracts applied some further light pressure to commodity-tied FX, while benefitting safe havens. JPY lagged behind USD & CHF and most of its other G10 peers after taking a hit from a round of sales into the Tokyo fix, possibly linked to Gotobi day flows.
• USD/CNH was happy to hug a tight range, even as China's CPI & PPI inflation missed expectations.
• Focus turns to 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.