AUD/USD inter-markets: Extending the sell-off towards 0.7400?

AUD/USD is on a declining trend since the last four trading sessions, and now slumps to fresh eight-day lows as several intrinsics justify the ongoing bearish momentum, with the most prominent being the  recent spike in the volatility and rising yields.

The extension rout in the Aussie is mainly driven by the same catalyst behind’s Friday’s sell-off. The VIX (CBOE volatility index), a risk barometer, is on one way up, rallying nearly 17% to three-month highs beyond 20 barrier.

While the US treasury yields continue to jump higher, with markets considering an imminent Fed rate hike following Friday’s hawkish Fed speaks. Rising yields make emerging market currencies such as the AUD less attractive for investors seeking higher returns on their investments. The treasury yields across the curve rally +1% to +1.30% so far this session.

 Furthermore, heavy sell-off triggered across the commodities’ space also weighs tremendously on the resource-linked Aussie. Oil prices are down -1.70%, Comex copper tanks -0.90%, silver futures plunge almost -3% and gold drops -0.50%.

Going forward, the Aussie is expected to remain under pressure as focus is expected to remain on the Fed speaks, which may trigger a fresh bout of volatility across the board.  Besides, the main economic events for the Aussie remains the Australian employment data along with the US retail sales figures lined up for release later this week.