February 02, 2023 21:41 GMT
Weighed By Broader USD Rebound, But Softer Commodity Tone Also A Headwind
AUD/USD spent most of the post Asia close on the back foot. The pair couldn't sustain levels above 0.7150 and we hit lows just under 0.7070 in NY. We aren't too far away from those levels now, last 0.7075/80. This is fairly close to levels that prevailed around the time of Wednesday's Fed meeting. The A$ was the third worst performer in the G10 space, down 0.85% for Thursday's session, with only NOK and GBP falling more.
- The sharp pull back in EU and UK yields (-20/-30bps in the 10yr) post their respective central bank decisions helped the USD rebound, as the markets start to price in/think about pivots in these regions as well.
- This weighed on AUD, with JPY the only G10 currency rising against the USD for Thursday. Equity sentiment was positive (SPX +1.47%) but this didn't aid risk appetite. AUD/JPY is back to the low 91.00 low, near the simple 50-day MA (91.02).
- Commodity indices stayed close to flat in terms of Bloomberg aggregates. These indices failed to rally on Thursday post the Fed. The chart below overlays AUD/USD versus base metal prices, which are now less supportive for the currency. Iron ore is also back to $122/ton.
- On the data front today, the final services PMI reading for Jan is due, along with home loan data (market forecast is -3.0% m/m, -3.7% prior).
Fig 1: AUD/USD Versus Base Metals
Source: MNI - Market News/Bloomberg
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