AUD: AUD/USD - Trying To Break Above 0.6960 As USD/JPY Drags The USD Down

The AUD/USD has had a range today of 0.7016-0.7032 in the Asia- Pac session, it is currently trading around 0.7025, -0.05%. The AUD has held up pretty well considering the escalation in the Middle-East, though it continues to underperform and trades with a heavy tone. The Middle-East backdrop remains as confusing as ever, the US has carried out what it calls a proportional response this morning and the Iranians' then responded with their own. Sounds like a comedy sketch of military tag. There were initially reports overnight a draft agreement had been sent to the US, yet how anybody can expect it to last when we see this morning's reaction is anybody's guess. On the day, I suspect this break below 0.7080-0.7100 should now see rallies faded in the short-term at least. The first resistance is back toward the 0.7060-0.7090 area. The US Dollar has broken its downtrend therefore while below 0.7100-0.7150 I would now be looking for the pair to drift back toward the 0.6850-0.6950 support where I think we could see some demand return. 

• MNI INTERVIEW: Ex-RBA Economist Sees Cash Rate Above 5%. Australian real interest rates remain too low to return inflation to target in a reasonable timeframe and the Reserve Bank of Australia is likely to need to raise the cash rate above 5% from its current 4.35%, though policymakers are still set to leave rates unchanged at next week's meeting, former senior RBA economist Mariano Kulish told MNI.
• Options : Closest significant option expiries for NY cut, based on DTCC data: none. Upcoming Close Strikes :  0.7250(AUD655m June 11) - BBG
• The AUD/USD Average True Range for the last 10 Trading days: 52 Points

Fig 1: AUD/USD spot Daily Chart

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

The 30-year JGB auction delivered a poor result. The low price failed to meet dealer expectations of 97.65 (Bloomberg survey). Moreover, the cover ratio decreased to 2.9363x (weakest since June 2025) from 3.4938x. The auction tail also lengthened to 0.38 from 0.22.

• Today’s outcome is weaker with this month’s 10-year auction, which delivered mixed results.
• As noted in our preview, today’s issuance came at an outright yield ~5bps higher than the level at last month’s issuance but 35bps below its cycle peak.
• The 10s30s yield curve was flatter than the level to the previous auction and around 50bps below its cycle peak at 170bps.
• On a relative value basis, the 30-year bond valuation was cheaper versus last month, based on the 20-/30-/40-year butterfly spread. The 30-year is at the top of the range seen over the past 12-months.
• The 30-year yield is 1-2bps cheaper in the afternoon session.

The Japanese Ministry Of Finance (MoF) sells Y450.8bn 30-Year JGBs:

• Average Yield (%): 3.860 (prev. 3.842)
• Average Price: 97.78 (prev. 98.02)
• High Yield (%): 3.888 (prev. 3.858)
• Low price: 97.40 (prev. 97.80)
• % Allotted At High Yield (%): 28.0000 (prev. 29.5739)
• Bid/Cover: 2.9363x (prev. 3.4938x)