The Australian dollar has been in the wars on Tuesday.
Undermined by a spike in US 10 treasury yields, a continued slide in the Chinese yuan and dovish remarks from the assistant governor of the Reserve Bank of New Zealand, the AUD/USD has been under pressure for most of the Asian session, tumbling from as high as .7611 to as low as .7544.
It currently buys .7559.
Despite Australian 10-year government bond yield lifting to as high as 2.272% earlier in the session, the highest level seen since June 24, the selling in the Aussie kicked into gear as US bond futures opened weaker, likely in a delayed response to the lift in crude prices and swing towards Hillary Clinton in the US presidential race following a market holiday on Monday.
From there, the selling accelerated as onshore trade in the Chinese yuan resumed with the USD/CNY rising to as high as 6.7151, the highest level seen since September 2010.
Offshore traded yuan, or CNH, also weakened with the USD/CNH jumping to 6.7252, a high not seen since January 1 at the peak of concerns over an acceleration in Chines capital outflows.
The weakness in the Aussie was further compounded by dovish remarks from John McDermott, assistant governor of the Reserve Bank of New Zealand, who said in a speech earlier today that “our current projections and assumptions indicate that further policy easing will be required to ensure that future inflation settles near the middle of the target range”.
That remark, scuppering suggestions that the RBNZ may be wavering on reducing interest rates further, weighed on the New Zealand dollar. The Aussie, is sympathy with its Kiwi counterpart, also followed suit.
Here’s the 5-minute AUD/USD tick chart: