AUD/USD inter-markets: seems vulnerable to extend disappointing jobs report-led reversal

Having touched a two-month high level of 0.7734, the AUD/USD pair reversed sharply and maintained its offered tone, erasing all of its strong gains registered on Wednesday. 

Thursday's sharp reversal was primarily led by disappointing Australian jobs data that reaffirmed RBA's concerns of weaker labor market conditions, which could lead to a downward surprise in inflation. The latest Australian CPI print for Q3 is due for release on October 26 and disappointment from inflation reading would increase possibilities of an RBA rate-cut, sooner rather than later. 

A sharp slide in Australian 10-year government bond yields is supportive of market concerns of further RBA monetary easing and is weighing on the pair heavily. Adding to this, softer tone around commodities, especially Copper, is further denting demand for commodity-linked currencies - like Aussie. 

Meanwhile, a broad based US Dollar strength on optimism led by increasing probability of an eventual win for Hillary Clinton at the upcoming US Presidential election in November, following the third and final US presidential debate, is exerting additional selling pressure around the major. 

Moreover, the prevalent cautious sentiment, as depicted by an up-tick in the Volatility Index (VIX), reaffirmed by slide in the US 10-year Treasury bond yields, is further driving investors away from higher-yielding currencies, including the Australian Dollar. 

Going forward, any further weakness in commodities led by global risk-aversion mood (rise in VIX) and (or) increasing prospects of Fed rate-hike action, would attract fresh selling pressure and turn the pair vulnerable to extend its reversal further towards 0.7600 round figure mark.