AUD/USD: Off lows even though Australian debt sale misses target
- AUD/USD has recovered from session lows but the upside is being capped above 0.6855.
- Australian debt sale failed to draw enough bids, possibly due to technical issues.
The AUD/USD pair has recovered losses and is currently trading largely unchanged on the day even though an auction of Australian debt missed the target.
The currency pair is currently trading at 0.6856, having hit a low of 0.6844 in the early Asian hours.
Australian Office of Financial Management (AOFM), which manages the government's debt, said a regular sale of A$1 billion of notes maturing on Jan. 24 drew bids worth just A$936 million, for a bid-to-cover ratio of 0.9263, according to Nasdaq.
Australian debt usually draws strong demand and rarely has a bid-to-cover ratio of 1, as it carries a top triple-A credit rating.
The latest auction miss, the first since 2002, is being associated with a technical issue. "The AOFM has billions in cash on hand and a miss of A$64 million in a single auction is immaterial," said Martin Whetton, head of bond & rates strategy at Commonwealth Bank of Australia, according to Nasdaq.
The AUD, therefore, is showing resilience. The upside, however, is being capped above 0.6855, possibly due to the weaker-than-expected Australia Services PMI data for October released at 22:00 GMT. The gauge came in at 50.8, missing the forecast of 52.2. Meanwhile, the Manufacturing PMI printed at 50.1 versus 49.0 expected.
The currency pair could pick up a strong bid if the US durable goods data, scheduled for release at 12:30 GMT, prints well below estimates, strengthening the case for Federal Reserve rate cuts.
Technical levels
Author
Omkar Godbole
FXStreet Contributor
Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.
