The Australian dollar fell against the US dollar, as the markets continue to fight bad headlines, and of course, higher interest rates in America.
AUD/USD
The Australian dollar has fallen against the US dollar early on Monday as we continue to see a lot of noisy behavior with the 10-year yield breaking above the 4.44% level in the United States. That has put a lot of strength back into the greenback.
Furthermore, we have to pay close attention to the idea that the markets are going to be thrown around by the various headlines as the situation in the Middle East got a little tense during the day with some missiles exchanged.
The 0.7150 level so far has offered support, and it is an area that's previously been important as well. So, it does make a certain amount of sense that we fell directly to that level. The question of course is whether or not we can see support going forward.
Central Bank Policy and Commodity Influence
This is an interesting pair because the Reserve Bank of Australia is one of the few central banks out there right now that has raised rates recently, so it has put a little bit of strength into the Australian dollar over the last several months.
Nonetheless, this is also a market that is getting a little bit of a boost by the commodity sector as well, so if there's one place you might see US dollar weakness over the next several weeks, it could be here.
The Australian dollar does seem to have stalled here as there is a real fight between the idea of commodities increasing the value of the Aussie dollar and of course the fear premium coming back in to increase the value of the US dollar. Ultimately I think we're still consolidating between 0.7225 and 0.71 below.