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Bond prices rise again forcing AUD back below 0.78

AUD - Australian Dollar

Attentions returned to price action across bond markets overnight with rates again showing significant gains prompting a sell off across equities and a broader risk-off shift. Having touched intraday highs at 0.7840 on the back of a strong Q4 GDP print, the AUD drifted back below 0.78 US cents as UK bonds let rates drift higher following a larger than expected debt issuance. Elevated rates again prompted investors to adopt a measured approach as a cautious tone permeated markets and forced the AUD toward intraday lows at 0.7775. Having edged upward into this morning’s open, the AUD currently buys 0.7790 US cents.

Attentions remain with the shifting risk narrative and bond market fluctuations with US non-farm payroll data headlining the macro-economic ticket tomorrow. With the US economy showing signs of life, a stronger labour market print could well drive renewed demand for risk into the weekend.

Key Movers

The US dollar found support through trade on Wednesday as bond market gains drove uncertainty across financial markets and prompted a shift to haven assets. Advancing against most counterparts the dollar largely shrugged off a softer than anticipated labour market preview and service index performance. Inflation pressures continue to mount in the US with the Price Paid Index surging to a 12-year high, driving gains across other inflation indicators. With budget and fiscal spending expected to inflate price pressures further, bond markets rose almost 10 basis points across 10-year notes. The euro gave up 1.21 to slip below 1.2050 while the pound failed to extend back beyond 1.40 tracking sideways and bouncing between 1.3920 and 1.4000.

With little of note on today’s macroeconomic docket, attentions remain with bond market price action as a marker for risk aversion ahead of tomorrow's US non-farm payroll print.

Expected Ranges

AUD/USD: 0.7680 - 0.7840 ▼

AUD/EUR: 0.6380 - 0.6520 ▼

GBP/AUD: 1.7790 - 1.8120 ▲

AUD/NZD: 1.0680 - 1.0780 ▲

AUD/CAD: 0.9790 - 0.9910 ▼