AUD/USD turns positive as AU-US yield spread rises 6 bps, focus on today's close

• AUD/USD is now trading in the green, having hit a low of 0.7164 earlier today.
• The AU-US 10-year yield spread is on the rise, thus the AUD may rise further.
• A close above 0.7192 is needed to validate Friday's bullish outside day.

The AUD/USD pair seems to have picked up a bid, tracking the rise in the spread between the Australian and US 10-year government bond yields.

The currency pair is currently trading at 0.7180, representing a 0.10 percent gain on the day, having hit a low of 0.7164 earlier today.

Meanwhile, the 10-year yield spread is seen at -60 basis points; up eight basis points from Friday's close of -68 basis points.

The fact that the uptick in the AUD is accompanied by an improvement in the AU-US yield differential indicates the pair could rise further, possibly above Friday's high of 0.7192. A close above that level would add credence to the bullish outside day (candle) created on Friday and open the doors for a re-test of recent highs near 0.73.

More importantly, a bullish close looks likely as riskier assets appear to be cheering the US' decision to soften its stance on China's subsidies in a bid to secure a deal next month.

Technical Levels