FOREX: AUD Crosses - AUD Looks To Build On Recent Outperformance

The BBDXY range overnight was 1199.17 - 1202.21, Asia is currently trading around 1201, +0.08%. The USD again found some support around the 1200 area after initially being heavily sold on the imminent shutdown. First support back towards the 1200 area and then 1195. The USD has historically not done well during shutdowns, but tends to bounce back quite hard when they eventually end. The fact we are still above 1200 has been impressive though I am not sure it can bounce too far as the shutdown orders look to be executed this morning. I thought it would be a tough ask to see any big directional moves this week until the market gets a look at the Payroll number but with this data now unavailable the ADP could take on a lot more relevance tonight.

• Bloomberg - “History Shows Shutdowns Help Bonds, Hurt Dollar. As the US edges toward its first shutdown in seven years, history shows mixed stocks, a weaker dollar, and stronger bonds during the stalemate.”
• Barchart on X: "U.S. Dollar entering its strongest 2-month period of the year historically." 
• “For all the worries that US tariffs would significantly dent the appeal of the dollar, its dominant share in global currency trading indicates otherwise. The greenback maintained its place as the most traded currency, being on one side of 89% of all foreign-exchange trades in April, according to preliminary results from the Bank for International Settlements’ triennial survey released Tuesday.” - BBG

Fig 1: BBDXY 2H Chart

Source: MNI - Market News/Bloomberg Finance L.P

The Australian Office of Financial Management (AOFM) will today sell A$1200mn of the 3.50% 21 December 2034 bond, issue #TB168. The line was last sold on 25 June 2025 for A$1000bn. Bidding at today's auction is likely to be shaped by several key factors:

• The current outright yield is approximately 20bps higher than at the previous auction, but around 40bps below the late-2024 peak.
• The 3s/10s yield curve is around 10-15bps flatter than the level at the last auction and currently sits 40bps below its April peak — the steepest level since late 2021.
• Today’s supply comes amid improving sentiment toward long-term global bonds.
• The bond is included in the XM basket, enhancing its relevance for benchmark-driven accounts.
• While some macro factors may temper demand, pricing is expected to remain firm at today’s auction.
• Results are due at 0200 BST / 1100AEST.

US equities continued to grind back towards its all-time highs brushing off concerns of an imminent US shutdown overnight. This morning US futures have opened lower on our open as the shutdown begins to be executed, E-minis(S&P) -0.35%, NQZ5 -0.45%. The AUD looks to be rebuilding momentum higher in the crosses after a period of consolidation.

• EUR/AUD - Overnight range 1.7714 - 1.7849, Asia is currently trading around 1.7765. The pair topped out after multiple failures to extend above 1.7900. Price is still in the middle of its recent 1.7600 -1.8100 range having failed to extend lower after moving below 1.7750 overnight. Expect sellers to fade bounces while price remains below 1.8000.
• GBP/AUD - Overnight range 2.0293 - 2.0428, Asia is trading around 2.0350. The pair has seen supply return on every look above 2.0500, the move lower has stalled back toward its support around 2.0300 where we should initially see some demand return, risk/reward looks a decent long first up. The price action of the pair is looking potentially exhaustive but a sustained break sub 2.0300 is needed to open up a deeper pullback towards 1.9800/2.0000. 
• AUD/JPY - Overnight range 97.43 - 97.98, Asia is trading around 97.80. The pair found solid demand back towards 97.00 and bounced last week with the help of the AU CPI print. While above 97.00 the focus will remain on September’s highs toward 98.50.
• AUD/NZD -  Overnight range 1.1359 - 1.1418, the cross is dealing in Asia around 1.1400. The Cross has broken above the multiple highs around the 1.1200 area and has accelerated up towards 1.1400. I would think this 1.1400/1.1500 area would initially be met with sellers and expect some work to be done up here before another extension higher.

Fig 1: GBP/AUD spot 2H Chart

Source: MNI - Market News/Bloomberg Finance L.P