Snapshot: AUD/USD is trading heavy below the 0.7050 level, pinned near ten-week lows as markets dial back expectations of further RBA tightening. The RBA’s cash rate remains on hold at 4.10% with Governor Bullock emphasizing uneven progress on services inflation, though traders have trimmed the probability of another hike to just 50%. This domestic policy recalibration is meeting a wave of risk aversion after US-Iran talks were abruptly canceled, driving the VIX up 12% to 18.44.
- RBA Policy Floor: The 4.10% Cash Rate Target provides a shaky defense for the currency, as any near-term softening in domestic labor conditions will accelerate rate-cut bets and expose the 0.7010 support level.
- Geopolitical Headwinds: Cancelled Swiss peace talks have sparked broad risk-off flows, dragging WTI crude down 4.5% to $84.65 and making the high-beta Aussie highly vulnerable to further liquidations.
Bias into NY: We favor selling AUD/USD rallies, targeting a clean break below 0.7010 as fading domestic yield support leaves the pair exposed to a rising US 2Y yield, currently up 15bp at 4.2%.