AUD/USD Inter-Market: Looking for a Test of 0.7300?
The AUD/USD pair halted its three-day winning streak and fell sharply this Thursday, having eroded almost 80-pips so far.
Today’s drop in the Aussie from near five-week tops can be mainly attributed to a sharp rise in the VIX (risk gauge), which reflected deterioration in the market conditions amid growing global growth concerns as China slowdown fears resurfaced after the Chinese consumer prices softened in May.
More so, extended weakness in copper prices after rallying to 2.14 levels earlier this week, also added to the bearish momentum in the major. Copper prices now trade -0.50% around 2.05 levels, at fresh monthly lows. While the yield spread remains USD-supportive today, in part justifying the bounce in the US dollar versus its major rivals.
Looking ahead, risks remain to the downside for the Aussie as the corrective slide may gain further traction, should the weekend’s Chinese industrial production and retail sales release deepen China slowdown fears.