AUD/USD Suffers Worst Daily Fall as US Dollar Surges
The US dollar surged to new heights on Wednesday, sending Treasury yields and the AUD/USD pair sharply lower. The strong data from flash PMIs reinforced hawkish Fed expectations, leading to a sharp sell-off in Treasuries.
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, yield spreads narrowed as shorter-dated yields rose faster than the long end, indicating a Fed repricing rather than simply higher term premium.
The AUD/USD suffered its worst daily fall in over three months, falling towards the 70c handle. With Australian jobs data due today, the Aussie enters the release under pressure and already within striking distance of the 70c level.