The Australian Dollar was little-changed today despite domestic yields roaring higher. The RBA did not defend their April 2024 government bond rate target of 0.10%, as it sailed past 0.30%. Yesterday’s inflation upside surprise has bond traders anticipating a pivot at the RBA monetary policy meeting next Tuesday.
The 10-year Australian government bond yield moved above 1.9% for the first time since March. The Australia–US 10-year government bond spread widened to more than 30 basis points in favour of Australian bonds (see chart in Technical Analysis section below).
The lack of reaction by the Australian Dollar might be because markets went into risk-off mode today. The Japanese Yen was the best-performing currency due to its defensive characteristics and energy markets going lower.
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