US Yield Pull Back Offsets Weaker Commodities/Equities

AUD/USD got above 0.6770 in the Thursday NY session, before pulling back to 0.6740/50 by the close. This still left the currency +0.45% higher for Thursday, the second best performer within the G10 space (only CHF outperformed). The pull back in US yields was the key driver of A$ strength, outweighing headwinds from softer equities/commodities.

• The 50-day EMA remains nearby at 0.6734, while key short term resistance rests at 0.6806, the Apr 14 high. On the downside dips sub 0.6700 have been supported recently, while 0.6620, the Apr 10 low should also act as a support point.
• Short term correlations with AU-US yield spreads have been higher in the past week, and the direction in spreads was aided by the US yield pull back through Thursday post the Philly Fed downside surprise.
• Other cross asset signals were negative, with iron ore slumping sub $113/ton, while copper is back close to 100-day MA support. Bloomberg aggregate commodity indices fell. The tone in US and EU equities was also softer, while the VIX edged higher to 17%.
• The data calendar has preliminary Judo Bank PMIs for April. There is no consensus estimate, but March readings remains sub 50.0 for manufacturing and services.