AUD/USD: Sidelined despite the rise in Aussie 10-yr bond yield

  • AUD is finding no love despite the uptick in the Aussie 10-year yield.
  • Trade tensions are likely capping the upside in the AUD.
  • AUD/USD has been restricted to a narrow range since Aug. 8.

AUD/USD is currently trading unchanged on the day around 0.6777, having hit a high of 0.6788 a few minutes before press time.

The yield on the Australian government bond yield is currently trading at 0.933 basis points, representing a four basis point gain on the day and a more than ten basis point gain on the record low of 0.86 basis points hit on Friday.

So far, however, the recovery in the benchmark yield has failed to put a bid under the Aussie Dollar.

The upside is possibly being capped by the US-China trade tensions. The US President Trump downplayed recession fears on Saturday but said that he is not ready for a trade deal with China.

Even so, the Asian stocks are reporting gains with Japan's Nikkei index currently adding 0.80%. also, the futures on the S&P 500 are adding 0.40%. Therefore, the AUD could pick up a bid during the day ahead and rise to the 21-day moving average, currently at 0.6837.

Awaiting range breakout

The pair charted a Doji candle on Aug.7 and posted gains on the following day, confirming a bullish Doji reversal. The Aussie, however, has found no love in the last six trading days and has been restricted to a narrow range of 0.6822 to 0.6735.

A break above 0.6822 would open the doors for a corrective rally to levels above 0.69. On the other hand, a range breakdown would expose the recent low of 0.6677.

Pivot levels

    1. R3 0.6819
    2. R2 0.6808
    3. R1 0.6793
  1. PP 0.6782
    1. S1 0.6767
    2. S2 0.6756
    3. S3 0.6741


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