Money The Australian dollar is under pressure as bond yields soar

08:55  16 may  2018
08:55  16 may  2018 Source:   businessinsider.com.au

The Australian dollar is getting hosed ahead of the federal budget

  The Australian dollar is getting hosed ahead of the federal budget The Australian dollar is getting hosed, falling to a fresh one-year low in European trade on Tuesday. Here's the scoreboard as at 6.45pm in Sydney. AUD/USD 0.7467 , -0.0049 , -0.65%The Australian dollar is getting hosed, falling to a fresh one-year low in European trade on Tuesday.

The Australian dollar fell heavily against the greenback on Tuesday, undermined by another increase in US bond yields which scaled fresh multi-year peaks. The AUD /USD fell heavily on Tuesday as US bond yields soared .

www.investing.com/analysis/pound- under - pressure - as -us- bond - yields -rise-200308987. The US dollar continues to climb against its rivals, and GBP/USD has slipped 2.1% since April 16. The Real Reasons Oil Prices Are Soaring By Ellen R. Wald, Ph.D. - Jun 27, 2018 9.

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The Australian dollar fell heavily against the greenback on Tuesday, undermined by another increase in US bond yields which scaled fresh multi-year peaks.

However, while that saw the AUD/USD fall back below 75 cents, as seen in the scoreboard below at 7am in Sydney, the Aussie fared better against the major crosses.

AUD/USD0.7471,-0.0054,-0.72%
AUD/JPY82.44,-0.07,-0.08%
AUD/CNH4.7554,-0.0124,-0.26%
AUD/EUR0.6310,0.0002,0.03%
AUD/GBP0.5530,-0.002,-0.36%
AUD/NZD1.0886,0.0002,0.02%
AUD/CAD0.9614,-0.0027,-0.28%

As has been the prevailing theme over the past month, the broader moves in currency markets on Tuesday were dictated by bond markets with the yield on benchmark 10-year US notes hitting a high of 3.09%, the loftiest level in seven years.

Australia, New Zealand dollars slugged as U.S. dollar surge shakes emerging markets

  Australia, New Zealand dollars slugged as U.S. dollar surge shakes emerging markets <p>The Australian and New Zealand dollars hit fresh multi-month lows on Wednesday as the relative outperformance of the U.S. economy sent its currency higher across the board.</p>The Aussie dollar was huddled at $0.7435, having touched its lowest since last June at $0.7424. It has now shed almost four U.S. cents in less than three weeks.

Investing.com – The dollar rose against a basket of major currencies buoyed by rising bond yields amid comments from Goldman Sachs suggesting that the Federal That stoked investor expectations for a more hawkish outlook on US rates, sending yields soaring while boosting the greenback.

au.investing.com/analysis/ australian - dollar -remains- under - pressure -200198196. Tabs Selection. Indices Commodities Forex Crypto Stocks ETFs Bonds . %COUNT%/4 selected Apply.

While the move coincided with the release of reasonable US retail sales data for April and hawkish commentary from several US Federal Reserve officials, David de Garis, Economist at the National Australia Bank, believes the move was driven by other factors.

"It was not a stellar tax cut-driven US Retail Sales report for April, nor more aggressive rate hike views from John Williams, nor any overtly hawkish soundings from Fed Governor nominees Clarida and Bowman who were appearing before the Senate Banking Committee overnight with seemingly measured statements," he said in his morning report.

"Perhaps it’s been a re-evaluation of the relative attractiveness of the US yield story and momentum/technical-driven moves."

A $141 Billion Manager Shorts Kiwi, Buys Aussie on Rates Bet

  A $141 Billion Manager Shorts Kiwi, Buys Aussie on Rates Bet It’s time to get out of New Zealand’s currency, according to AMP Capital Investors Ltd. Instead, go long the Australian dollar on bets that the nation’s economy will outperform its neighbor across the Tasman Sea. The premium that New Zealand’s bonds trade at over Australia is the narrowest it’s been, while in the case of 10 years it’s evaporated, according to Nader Naeimi, who heads a dynamic investment fund at AMP Capital. Real yields will likely dictate where the currencies are heading in the absence of central bank moves, he said.

Italy bond yields soar on election prospects. By. WilliamWatts. Italian bonds sold off sharply, pushing up yields , on fears of a new general election that could effectively turn into a referendum on the euro, while Spanish bonds were also under pressure ahead of a confidence vote later this week

Spain's new right-wing government was also under pressure after Spanish bond yields also began to climb. Bond yields reflect the cost of borrowing for nations and corporations. Stock markets slump as euro hits 11-month low against the dollar .

Whatever the reason, it certainly helped the US dollar which ripped higher during the session, helped by the lift in yields and further soft economic data from Europe which weighed upon the euro.

A such, the AUD/USD currently sits at .7471, more than one cent below the high struck late last week.

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Turning to the day ahead, there's a raft of important data releases due out both in Australia and abroad.

Locally, the main event comes from the release of Australia's March quarter Wage Price Index (WPI) at 11.30am AEST. A quarterly increase of 0.6% is expected, leaving the increase on a year earlier unchanged at 2.1%.

While not traditionally a market-mover, this 10-second guide explains why that may not be the case today.

Aside from the WPI, the latest Australia Westpac-MI consumer sentiment report for May will arrive at 10.30am AEST.

Outside of Australia, regional highlights today include Q1 GDP from Japan and Chinese new home price data for April. The former arrives at 9.50am AEST, the latter at 11.30am AEST.

Later in the session, markets will receive CPI data from the eurozone, Germany and Italy along with building permits, housing starts and industrial production figures from the United States.

It will also be a busy day for central bank speeches with Draghi, Coeure and Praet from the ECB, along with Bostic and Bullard from the US Fed, all scheduled to be in action.

The Australian dollar is looking resilient despite a lift in geopolitical concerns .
The Australian dollar rose against the greenback on Thursday despite a modest lift in risk aversion. Geopolitics once again dominated, weighing on the US dollar.

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