Aussie Dollar Strengthens Against Rising US Yields

The Australian Dollar (AUD) continued its upward trajectory for the second consecutive day on Monday, defying the rise in US Treasury yields, which typically strengthens the US Dollar. Despite the US Dollar appreciating against a basket of six currencies, the AUD/USD pair traded at 0.6972, up 0.37%. The Aussie's resilience was supported by gains in Wall Street, particularly in tech stocks, which boosted the Nasdaq and S&P 500, offsetting the impact of higher US yields driven by elevated energy prices.

The US ISM Services PMI for September showed a slight decline from 55.4 to 54.9, falling below forecasts of 55. Although the index indicated the 27th straight month of expansion, the sharp rise in input costs raised inflation concerns among businesses. Looking ahead, the US economic calendar is relatively light until the release of the Federal Reserve's last meeting minutes on Wednesday, October 7, followed by Initial Jobless Claims on October 8 and the University of Michigan Consumer Sentiment on October 10.

In Australia, the economic schedule includes the AIG Industry Index for August and the October Consumer Inflation Expectations on October 7. Despite expectations that the Reserve Bank of Australia (RBA) will keep interest rates on hold until at least May 2027, the Aussie Dollar advanced. RBA Governor Bullock noted during a press conference that three rate hikes could be sufficient to bring inflation closer to the central bank's target.

Technically, the AUD/USD pair traded at 0.6969 in the daily chart, maintaining a bearish near-term bias as it held below key resistance levels around 0.7086-0.7090. The Relative Strength Index (14) at 34.5 suggested that while downside momentum remains dominant, selling pressure may be easing. Immediate resistance is seen at 0.7086-0.7087, with additional hurdles near 0.7111 and 0.7118, while support is found at 0.6946 and a deeper floor around 0.6367.