FOREX: AUD Crosses-AUD Outperformance Building Momentum, GBP/AUD Topping Out ?

The ESU5 overnight range was 6391.25 - 6474.75, Asia is currently trading around 6466. The ESU5 contract stormed to new all-time highs in the N/Y session as the market gears up for a potential series of rate cuts. This morning US futures have opened pretty muted though still at their highs, ESU5 -0.02%, NQU5 +0.03%. Only a break below 6200 would potentially signal a deeper correction but for now the price action in stocks continues to be bullish ignoring all headwinds as the Trump Administration runs the economy on hot. 

• Ben Hunt on X: “If we’re gonna cut in Sept (90% mkt odds as I write this) with core at 3.1% and rising, wages at 3.9% and rising, stocks and home prices at all-time highs … Can we at least stop talking about the Fed’s 2% inflation ‘target’? It’s just insulting to continue this charade.” 
• Charlie Bilello on X: “1. Stocks: all-time high 2. Home Prices: all-time high 3. Bitcoin: all-time high 4. Gold: all-time high 5. Money Supply: all-time high 6. National Debt: all-time high 7. CPI Inflation: 4% per year since Jan 2020, 2x the Fed's "target" 8. Fed: cutting interest rates next month.”
• Daily Chartbook on X: "Over July 22nd - August 5th, Hedge Fund short sold $4.3bn - the largest 2 week amount for at least the past 10 years. The resultant level of outstanding shorts in notional terms also marked a new high. -GS Quinn.”

Fig 1: SPX Daily Chart

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

For July, export and import prices both rose in m/m terms. Export prices were up 1.6%, while import prices were up 2.4%m/m. For import prices this was the first m/m rise since January of this year. In y/y terms, both export and import prices were still in negative territory, but up from the June levels. Export prices were -5.4%y/y, while imports were -10.4%. 

• The chart below plots y/y changes in USD/JPY versus import prices y/y. To end July USD/JPY was up a touch in y/y terms. If current spot levels prevail, (currently around 147.80), USD/JPY will remain positive in y/y terms to end September (note USD/JPY was 152.03 end Oct last year).
• This implies some upside to import price y/y momentum in the near term, albeit fairly modestly. If USD/JPY holds around current level to end September, we would be up +2.9% in y/y terms.  

Fig 1: Japan Import Prices & USD/JPY, Y/Y 

Source: Bloomberg Finance L.P./MNI 

The Australian Office of Financial Management (AOFM) will today sell A$1200mn of the 4.25% 21 December 2035 bond. The line was last sold on 9 July 2025 for A$1200mn. Bidding is likely to be shaped by several key factors: 

• The current outright yield is 5-10bps lower than the previous auction and approximately 50bps lower than the peak in late 2024.
• The 3/10 yield curve is around the same level as the previous auction but sits around 20bps below its recent high.
• On the negative side, the auction comes amid weaker sentiment toward longer-dated global bonds.
• However, the line is included in the XM basket.
• While some factors may limit the overall strength of bidding, there is an expectation of continued firm pricing at today's auction.
• Results are due at 0200 BST / 1100 AEST.