The Australian dollar is the weakest performing major currency on the week
And this despite the euro's fall-off-the-cliff moment yesterday. Against the greenback, the aussie has fallen by about 1.8% so far. Lackluster data followed by hawkish guidance by the Fed has helped to push AUD/USD lower but we're also seeing positive data out of the US - like yesterday's retail sales figures.
To add more woes for the aussie, 10-year bond yields have been on a steady declining path this week falling by more than 10 bps. While bonds have been holding steady during the last two sessions, the fall in Australia's 10-year bond yields is more notable as compared to that of Treasuries:
The yields spread between Australia and US 10-year bonds is inching back towards the May lows and currently sits around 23 bps in favour of Treasuries. With the Fed signaling a further two hikes this year and the RBA staying at zero, the divergence is only going to grow larger and this will continue to be one reason to support a lower AUD/USD in 2H 2018.
