Australian Dollar stabilizes as rebound in US yields supports the USD
- AUD/USD loses momentum after hitting a fresh four-month high at 0.7237 earlier on Wednesday.
- Rebounding US Treasury yields allow the US Dollar to recover its earlier losses.
- Middle East tensions and rising Oil prices continue to limit the Australian Dollar’s upside potential.
AUD/USD stabilizes around 0.7220 at the time of writing on Wednesday, after hitting a fresh four-month high at 0.7237 earlier in the day. The Australian Dollar (AUD) loses some momentum as the US Dollar (USD) rebounds, supported by rising US Treasury yields.
The benchmark 10-year US Treasury yield climbs to 4.85%, while the 30-year yield reaches 5.30%. The rise in yields comes after the United States (US) Treasury Department announced plans to buy back $6 billion of longer-term government debt, three times the usual size of its operations.
The operation is aimed at improving liquidity and supporting the smooth functioning of the US government bond market. However, longer-term yields move higher following the announcement, suggesting that the larger buyback is not enough to immediately ease selling pressure on US government debt.
Higher yields provide support to the US Dollar by increasing the relative attractiveness of US fixed-income assets. The US Dollar Index (DXY), which measures the value of the Greenback against a basket of six major currencies, consequently erases its earlier losses and returns to around flat territory on Wednesday.
The Greenback's rebound curbs the advance in AUD/USD, which had previously benefited from encouraging Chinese inflation data. China's Consumer Price Index (CPI) rose by 0.4% in August after contracting by 0.1% in July, beating expectations for a 0.3% increase. On an annual basis, inflation accelerated to 0.8% from 0.5% previously, in line with market expectations.
The Australian monetary policy outlook also remains supportive of the Australian Dollar. Reserve Bank of Australia (RBA) Deputy Governor Andrew Hauser called on Tuesday for further action to bring inflation under control.
The upside potential for AUD/USD remains limited, however, by risk aversion linked to escalating tensions in the Middle East and rising Oil prices. Hostilities involving the US, Iran and the Houthis increase the risk of a broader regional conflict, weighing on investor sentiment.
Market attention now turns to the release of the US Producer Price Index (PPI) due on Thursday, ahead of the Consumer Price Index (CPI) on Friday.
Australian Dollar Price Today
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the strongest against the Canadian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.05% | -0.06% | -0.35% | 0.16% | -0.02% | 0.15% | 0.05% | |
| EUR | 0.05% | 0.01% | -0.30% | 0.21% | 0.03% | 0.21% | 0.11% | |
| GBP | 0.06% | -0.01% | -0.29% | 0.21% | 0.04% | 0.21% | 0.11% | |
| JPY | 0.35% | 0.30% | 0.29% | 0.51% | 0.33% | 0.47% | 0.41% | |
| CAD | -0.16% | -0.21% | -0.21% | -0.51% | -0.18% | -0.01% | -0.10% | |
| AUD | 0.02% | -0.03% | -0.04% | -0.33% | 0.18% | 0.18% | 0.09% | |
| NZD | -0.15% | -0.21% | -0.21% | -0.47% | 0.01% | -0.18% | -0.09% | |
| CHF | -0.05% | -0.11% | -0.11% | -0.41% | 0.10% | -0.09% | 0.09% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).
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