AUD/USD drops below 0.76 & yield differential narrows on weak Aussie wage growth

• AUD/USD has breached the 0.7625-0.7730 range to the downside.
• Aussie wage price index missed estimates.
• 10Y AU-US yield differential narrows in the AUD negative manner.

AUD/USD pair fell to 0.7588; the lowest level since Jul. 10 low and the 10-year Aussie-US bond yield spread dropped to25 basis points from 28 basis points after the data released in Australia showed anemic wage growth in the third quarter.

The wage price index for Q3 came-in at 0.5 percent quarter-on-quarter vs. 0.7 percent expected. The annualized figure came-in at 2.0 percent vs. 2.2 percent expected. Year-on-year, the number did move higher to 2.0 percent from the previous reading of 1.9 percent, still the AUD is being offered as investors seem to focus on the fact that the actual data missed estimates.

The decline on the narrowing of the yield spread indicates the currency could remain on the back foot in Europe. The drop could be extended further if the equity market trades in the risk-off manner and gold shows no signs of life.

AUD/USD Technical Levels

An immediate support is seen at 0.7571 (Jul. 5 low) ahead of 0.7535 (Jun. 22 low) and 0.75 (psychological support). On the higher side, breach of resistance at 0.7609 (previous day's loow) would expose 0.7632 (session high) and 0.7654 (10-day MA).