AUD/USD: has been subject to increased volatility, watch AUD/JPY

• AUD/USD: vol dictates direction, correlations breaking down.
• AUD/USD: trades within key DSMAs awaiting CAPEX.

AUD/USD is testing territory down below the 21-D SMA at 0.7797 making a fresh low for the session. Currently, AUD/USD is trading at 0.7795, up 0.10% on the day, having posted a daily high at 0.7821 and low at 0.7781.

AUD/USD: modest recovery move fizzles ahead of 50-DMA

AUD/USD could not break to the top side overnight as sellers emerged just ahead of 0.7800 in early Asia and then again on the back of the Chinese data. However, the Aussie was able to capitalise on some dollar weakness in the Asian session that followed through in Europe/late London, arriving in NY as the strongest currency on the block before sellers emerged once again ahead of the option expiries at 15GMT. 

Vol on the rise, anchored by AUD/JPY

There are some bizarre moves in the crosses but the DXY is strong above 90.60 despite US 10yr yields being under the watermark of 2.90%. However, there has been some recent weakness in the dollar allowing the antipodeans some relief. The VIX is on the rise again, +0.32% at 18.65 and correlations have broken down with a flight to safety in the yen. Stocks lower and AUD/JPY is anchoring the Aussie ahead of CAPEX in Asia today.

AUD/USD levels

AUD/USD offered emerged at the 10-D SMA at 0.7863 and has sold off to the 200-day ma at 0.7784. "We are viewing this as near-term consolidation and the market will maintain a negative bias while capped by the 61.8% retracement at 0.7991," explained analysts at Commerzbank who suggested that only a move below 0.7743 (61.8% retracement) will target the 0.7637/78.6% retracement and the 0.7581 2016-2018 uptrend.