The Australian dollar got smashed late in the Asian session

Image: Ian Walton/Getty Images.

The Aussie dollar is getting sold off in afternoon trade, with a sharp move lower since around 2pm AEST.

Here’s a five-minute chart of today’s price action, via


AxiTrader’s Greg McKenna noted that while the US has under-performed other major currencies, traders have largely ignored the Aussie.

“So while the Japanese yen is around half a percent stronger against the US dollar, and the euro and pound have gained 0.3%, the Aussie has gone backwards. That’s even with iron ore higher and copper rallying,” McKenna said.

He added the lack of demand for AUD can be at least partly attributed to the narrowing spread between US and Australian government debt, particularly in shorter-term bonds as US 2-year yields push higher.

“The yield spread on Australian and US 2-year bonds is at just a little over 6 points, while the Aussie 10-year is offering a pick up of just 20 points to bond investors. You can hear the shouts of “why bother” in Boston, New York, and Newport from here,” McKenna said.

“The Aussie will continue to under-perform until that spread turns around or until the AUD falls far enough to look like value. That’s not likely until there is a 73 cent handle on it – at least.”

Source: AxiTrader

At current levels, the Aussie is at its lowest point against the US dollar since June 23.