AUD/USD breaks below 0.76 despite favourable bond yield spread

AUD/USD has extended losses to 0.7586 levels despite the rise in the Australian government bond yields and the resulting widening of the Aussie-US yield spread.

Snaps three-day winning streak

The currency pair has snapped three-day winning streak even though Fed’s Yellen on Friday stated that the central bank may allow the economy to run ‘hot’; meaning rates could be hiked slower than market expectation.

The losses witnessed today contradict four basis point ise seen in the 10-yr bond yield in Asutralia. Its US counterpart remains flat, suggesting the yield spread is in favor of Aussie. Moreover, weaker daily Yuan fix could be weighing over Aussie.

AUD/USD Technical Levels

Breach of support at 0.7541 (100-DMA) would expose 0.75 (zero figure + rising trend line support on daily), under which losses could be extended to 0.7442 (Sep 13 low). On the other hand, a break above 0.76 could yield a re-test of session high of 0.7622, beyond which a majhor hurdle is seen at 0.7676 (July 15 high).