This is currently offering a layer of support beneath AUD/USD as well as arresting further slippage in various AUD cross rates. “We do expect the latter in particular to resume before long, especially if expectations for lower RBA policy rates continue to build ahead of the October 2 Board meeting and/or incoming China data fails to reveal any evidence of a pick-up in growth.” writes the Team.
With regards to AU bond yields, trading has commenced in a broad range into the year-end. The AU 10y bond seen to be in a range of 3.10-3.50% and 3y in a range of 2.40% to 3.0%. “At current levels the front of the swap curve is looking expensive – there are certain factors driving this which may persist for a little longer but if RBA is not easing in October (our view) then good opportunities opening up to pay short dated swaps.” they add.