AUD/USD Crashes Towards 70c Amid US Dollar Surge

The Australian dollar suffered its worst daily fall in over three months as strong US data sent Treasury yields and the US dollar sharply higher. This surge was fueled by a set of flash PMIs that reinforced hawkish Fed expectations, causing investors to reassess the path for US rates.

The composite PMI reached a five-year high, raising concerns that the economy is reaccelerating with activity and price pressures running hot. As a result, Treasury yields rose sharply, and the US dollar strengthened against all major currencies, including the Australian dollar (AUD/USD).

AUD/USD fell towards 70c as the risk-off tone weighed on global equities, with the Nasdaq 100, S&P 500, and Dow Jones all falling around 0.7%, 0.9%. The surge in bond yields has stolen the show, making today's employment figures less important than previously anticipated.

Market pricing and economists are backing a hike next week, but with Governor Michelle Bullock stating that an unemployment rate of 4.5%, 5% could help cool inflation pressures, the closer unemployment moves towards 5%, the greater the odds that the RBA tightening cycle is nearing its peak.