Falling yields to keep Aussie range bound

Australian dollar is the top performer today, after job report surprised to the upside against market expectation.

Aussie is trading 0.776 against dollar.

Question now comes is a bottom formation in place?

• In short term plausible, however unlikely in medium to long term. Even in short term Aussie would remain victim of US dollar strength which might lead to range bound trade.
  
  
• In the short term USD is long due a significant correction, however dollar remains well placed for medium to long term rally.

What is the challenge for Aussie?

• Australian yield have started falling quite rapidly since October last year as market is expecting further easing by RBA. Australian 2 year yield chart is added, which shows yield has dropped more than 100 basis points since October last year and so far showing no signs of stabilizing.

RBA stance -

• Reserve Bank of Australia (RBA) sounded less dovish in latest statement, however reiterated that Aussie remain still stronger than appropriate against other currencies and keep the outlook for easing intact.

RBA's stance would continue to weigh on Aussie, even if dollar takes a broad based hit globally.