Risk Off Move Hurts A$, Focus on US CPI Now

The deterioration in risk sentiment overnight drove the AUD lower, as US earnings disappointed and fears grew in the crypto market. After peaking at 0.6520, AUDUSD is now trading almost a full cent lower at around 0.6425. Flight to quality meant that AUD underperformed many in the G10 and the DXY rose 0.8%.

• The risk-off move meant that AUDJPY fell and is now at 94.10 and AUDEUR is also lower around 0.6420. However it rose against GBP to 0.5662. After rising against NZD to 1.0971 earlier, it gave back most of those gains and is now 1.0925.
• 0.6522 provided resistance for AUDUSD. A clear break of this is needed to strengthen a bullish condition. The initial support is 0.6412, the October 21 low. A break through 0.6272 (November 3 low) would reinstate a bearish threat.
• Equity markets were down overnight but with the US experiencing a sharper correction than Europe. The S&P 500 fell 2.1% whereas Eurostoxx was down 0.3%. VIX was higher finishing at 26%. Commodities were also lower with WTI down 3.7%, copper -0.3% and iron ore is at $86.60.
• This morning the Melbourne Institute’s consumer inflation expectations for November are released. They could be higher this month on higher petrol prices and the well publicised expected increase in power prices. The focus of the day will be the US October CPI. Headline CPI is expected to moderate to 7.9% y/y and core only slightly to 6.5%.