The spread between the yield on the 10-year Australian and US government bonds fell to 13.8 basis points on Wednesday, the lowest level since April 13, according to data source TradingView.
The spread has declined from 31.3 basis points to 13.8 basis points this month. That explains the recent sell-off in AUD/USD.
The pair is trading at 0.7048 at press time, the lowest level since July 21, having hit a high of 0.7413 on Sept. 1. The downward move has gathered steam this week amid the US dollar’s broad-based recovery rally. AUD/USD has dropped by nearly 300 pips this week alone. The 10-year yield spread is currently seen at 14.2 basis points.
AU-US 10-year yield spread
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