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Thomson Reuters
May 16 - 12:12 AM
AUD/USD - COMMENT-AUD/USD Doomed By Break Higher In US Yields
First appeared on eFXplus on May 15 - 10:25 PM

With 10-year yield spreads between Australia and the US at their widest point in favour of the US since the early 1980s, the prospects for the AUD/USD do not look bright, especially with little sign of the wage inflation that might prompt the RBA to hike rates nL3N1SN01Y.
As 10-year US Treasury yields spiked through the 2014 high of 3.041% following Tuesday's solid US retail sales data, the chances of a bounce in the Aussie dollar dimmed considerably.
A test of the 2018 low at 0.7413 and then the 61.8 Fibo of the 2016-2018 rally at 0.7327 now look to be a racing certainty.
To add to the gloom for the AUD, London copper fell 1.1% Tuesday and the London iron ore fix was down 2.4%.
This all comes on top of more strain on emerging Asian currencies that have also weighed on the AUD as a liquid proxy for Asia nL1N1SG02F.
As the RBA has reiterated on numerous occasions that they will keep the cash rate steady at record lows for a considerable period of time, higher US rates are bound to push the AUD lower - something Australia's central bank won't mind at all.

AUD daily: Click here

AU/US 10y spread: Click here

Source:
Thomson Reuters IFR Markets

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