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Money The Australian dollar is under pressure as bond yields soar

08:55  16 may  2018
08:55  16 may  2018 Source:   businessinsider.com.au

The Australian dollar is getting hosed ahead of the federal budget

  The Australian dollar is getting hosed ahead of the federal budget The Australian dollar is getting hosed, falling to a fresh one-year low in European trade on Tuesday. Here's the scoreboard as at 6.45pm in Sydney. AUD/USD 0.7467 , -0.0049 , -0.65%The Australian dollar is getting hosed, falling to a fresh one-year low in European trade on Tuesday.

The Australian dollar fell sharply against the dollar on Tuesday, undermined by another increase in yields on US bonds that climbed new peaks for several years. However, while the AUD / USD fell below 75 cents, as seen in the table below at 7 a.m. in Sydney

The Australian dollar fell heavily against the greenback on Tuesday, undermined by another increase in US bond yields which scaled fresh multi-year peaks. The AUD /USD fell heavily on Tuesday as US bond yields soared .

a man wearing a suit and tie© Provided by Business Insider Inc

The Australian dollar fell heavily against the greenback on Tuesday, undermined by another increase in US bond yields which scaled fresh multi-year peaks.

However, while that saw the AUD/USD fall back below 75 cents, as seen in the scoreboard below at 7am in Sydney, the Aussie fared better against the major crosses.

AUD/USD0.7471,-0.0054,-0.72%
AUD/JPY82.44,-0.07,-0.08%
AUD/CNH4.7554,-0.0124,-0.26%
AUD/EUR0.6310,0.0002,0.03%
AUD/GBP0.5530,-0.002,-0.36%
AUD/NZD1.0886,0.0002,0.02%
AUD/CAD0.9614,-0.0027,-0.28%

As has been the prevailing theme over the past month, the broader moves in currency markets on Tuesday were dictated by bond markets with the yield on benchmark 10-year US notes hitting a high of 3.09%, the loftiest level in seven years.

Australia, New Zealand dollars slugged as U.S. dollar surge shakes emerging markets

  Australia, New Zealand dollars slugged as U.S. dollar surge shakes emerging markets The Australian and New Zealand dollars hit fresh multi-month lows on Wednesday as the relative outperformance of the U.S. economy sent its currency higher across the board.The Aussie dollar was huddled at $0.7435, having touched its lowest since last June at $0.7424. It has now shed almost four U.S. cents in less than three weeks.

After doing very little for much of the Asian session, the Aussie came under late selling pressure on news that Westpac Bank, Australia 's second-largest As Australian government bond yield sank, so too did the Australian dollar , hitting a low of .7276 against the greenback in European trade before

The Australian dollar continued to slide on Tuesday, falling to a fresh one-month low against the US dollar . It also led to a rise in US bond yields , helping to support the US dollar during the session. It also weighed on the AUD /USD, as seen in the 5-minute chart below.

While the move coincided with the release of reasonable US retail sales data for April and hawkish commentary from several US Federal Reserve officials, David de Garis, Economist at the National Australia Bank, believes the move was driven by other factors.

"It was not a stellar tax cut-driven US Retail Sales report for April, nor more aggressive rate hike views from John Williams, nor any overtly hawkish soundings from Fed Governor nominees Clarida and Bowman who were appearing before the Senate Banking Committee overnight with seemingly measured statements," he said in his morning report.

"Perhaps it’s been a re-evaluation of the relative attractiveness of the US yield story and momentum/technical-driven moves."

A $141 Billion Manager Shorts Kiwi, Buys Aussie on Rates Bet

  A $141 Billion Manager Shorts Kiwi, Buys Aussie on Rates Bet It’s time to get out of New Zealand’s currency, according to AMP Capital Investors Ltd. Instead, go long the Australian dollar on bets that the nation’s economy will outperform its neighbor across the Tasman Sea. The premium that New Zealand’s bonds trade at over Australia is the narrowest it’s been, while in the case of 10 years it’s evaporated, according to Nader Naeimi, who heads a dynamic investment fund at AMP Capital. Real yields will likely dictate where the currencies are heading in the absence of central bank moves, he said.

The Aussie dollar is also higher against the yen but has fallen against the euro. Money The Australian dollar is under pressure as bond yields soar - au.lalalay.com.

When bond prices rise, bond yields fall and vice-versa. Here’s a simple illustration to help you remember: Still confused? For example, in the U.S., you would focus on the 10-year Treasury note. A rising yield is dollar bullish.

Whatever the reason, it certainly helped the US dollar which ripped higher during the session, helped by the lift in yields and further soft economic data from Europe which weighed upon the euro.

A such, the AUD/USD currently sits at .7471, more than one cent below the high struck late last week.

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Turning to the day ahead, there's a raft of important data releases due out both in Australia and abroad.

Locally, the main event comes from the release of Australia's March quarter Wage Price Index (WPI) at 11.30am AEST. A quarterly increase of 0.6% is expected, leaving the increase on a year earlier unchanged at 2.1%.

While not traditionally a market-mover, this 10-second guide explains why that may not be the case today.

Aside from the WPI, the latest Australia Westpac-MI consumer sentiment report for May will arrive at 10.30am AEST.

Outside of Australia, regional highlights today include Q1 GDP from Japan and Chinese new home price data for April. The former arrives at 9.50am AEST, the latter at 11.30am AEST.

Later in the session, markets will receive CPI data from the eurozone, Germany and Italy along with building permits, housing starts and industrial production figures from the United States.

It will also be a busy day for central bank speeches with Draghi, Coeure and Praet from the ECB, along with Bostic and Bullard from the US Fed, all scheduled to be in action.

The Australian dollar is looking resilient despite a lift in geopolitical concerns .
The Australian dollar rose against the greenback on Thursday despite a modest lift in risk aversion. Geopolitics once again dominated, weighing on the US dollar.

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