Snapshot: The Australian Dollar remains pinned below 0.7050, hovering near ten-week lows as domestic pricing capitulates on any remaining RBA rate hike premium. Despite Governor Bullock’s warnings of uneven inflation progress, markets are rapidly unwinding expectations of further tightening with the cash rate held at 4.10%. This domestic policy re-rating leaves the currency highly vulnerable, particularly as rising US real yields and geopolitical flares drive a global safety bid before the New York open.
- Key Technical Level: Support at 0.7000 remains the critical line in the sand, while any recovery attempts are capped at 0.7050 where net-long leveraged accounts—who cut their exposure by 23,652 contracts last week—are looking to exit.
- NY Session Risk: Geopolitical headlines out of the Middle East, including aborted US-Iran peace talks, could spark another spike in the VIX (currently up 12.37% at 18.44) and trigger further liquidation of risk-sensitive assets.
Bias into NY: Bearish. We expect AUD/USD to test the 0.7000 handle as domestic rate support crumbles, with the downside accelerated if US 10-year real yields climb further above 2.23%.