AUD/USD: small bid ahead of Tokyo open

AUD/USD that just made a small pop within 10 pips is currently consolidated in a subdued market lacking a point of direction. 

Wall Street closed mixed while some of the correlations were breaking down with a slightly softer dollar and WTI falling off a cliff after an initial strong rally. Iron ore also rose, but overall the Aussie is not finding support on commodity prices as we head through towards the end of the week. 

Wall Street: mixed on bizarre decoupling intermarket

In respect of the US 10yr treasury yields, these rose from 1.74% to 1.80%, while the 2yr yield rose from 0.86% to 0.87%. Data wise, the Australia's terms of trade for Q3 is out with export prices that were higher for a second quarter on the commodity price bounce, but the analysts at Westpac suggested that import prices probably fell for a fourth quarter due to energy prices and the exchange rate. In the U.S. we await durable goods orders that may not prove positive and further put back Fed rate hike expectations and soften the greenback. 

AUD/USD levels

"The overnight retreat has left in a more neutral state today around 0.7650," suggested the analysts at Westpac, while their  1-3 month outlook suggests that while further gains to around 0.77 are possible during the month ahead, driven in part by the faltering US dollar and yield-chasing flows, "the AUD is losing energy (perhaps a reflection of its declining yield advantage). By year end, there's a case for a correction towards 0.74 if the Fed tightens in December as we expect."