- US 10-year bond yields exceeded the 3.00% mark but US dollar seems neutral.
- AUD/USD bulls are using the 0.7600 handle to create a pause in the recent bear move.
- Gold and Copper trading firm, can influence the commodity-linked currency, AUD.
The AUD/USD is trading at around 0.7611 up 0.08% on Tuesday as the bulls are attempting to stage a rebound in the 0.7600 region.
The commodity-linked currency lost more than 200 pips in the last 3 days as the US dollar gained extra strength from the multi-year highs seen in the US bond yields.
The 10-year US bond yields spiked above the 3.001% level on Tuesday however the US Dollar Index, which gauges the greenback against a basket of currencies, is not following through. The index is trading 0.08% lower on Tuesday in the 90.85 region after three repeated attempt at the 91.00 handle.
Interestingly, analysts at ING argue that the recent surge in the US dollar is not likely the start of a new trend but rather a short-squeeze “fuelled by (1) local factors (weak data for GBP and NZD; presidential election risks for MXN) and (2) a lack of impetus in the recent drivers for USD weakness.”
Meanwhile gold is consolidating in the $1,320-$1,328 troy ounce range and copper prices have also stabilized in the last 5 days of trading. Higher metal prices have a direct positive effect on the Australian dollar.
Earlier in the session, the US data came mainly above expectations. The US Housing Price Index for February came in above consensus at 0.6% versus 0.5% forecast by analysts. The New Home Sales accelerated to 0.694 M versus 0.630 M while the New Home Sales Change accelerated to 4.00% against 1.9% forecast by analysts. However, the recent low-tier data is going to be largely overshadowed by the current sentiment on the US dollar which is trading at 8-week highs.
Earlier in Asia, the Australian inflation data came in line at 0.5% quarter-on-quarter while increasing 2.0% year-on-year in the first quarter of the year. The news did not affect the currency market though.
AUD/USD daily chart
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The main trend is bearish with bulls attempting a pullback. Supports are seen at 0.7550-0.7600 swing lows and at 0.7500 cyclical low. Resistances are priced in at the 0.7642 swing low and at the 0.7728 swing high.
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