RBA Minutes preview: AU-US 10-yr yield spread eyes range breakout

Despite failing to hold above 0.80 handle, the AUD/USD is mildly bid this Tuesday morning ahead of the RBA minutes release.

• Read - When are the RBA minutes and how could they affect AUD/USD?

The spread or the difference between the Australia 10-year government bond yield and the US 10-year Treasury yield currently stands at 59bps. Over the last few days, the spread has widened from 47bps to 59bps, but still remains largely restricted to a narrow range of 60bps to 48bps . This explains the bullish exhaustion in the AUD/USD pair around 0.80 handle.

The yield spread may break higher in favor of the AUD if the RBA minutes focus more in the positives - strong labor market, improvement in business conditions and downplays risks arising out of household debt and strong Aussie dollar.