AUD/USD has pulled back from an overnight high of 1.0176, and price action remains in lockstep with EUR/USD and US futures.

Today's dismal Japanese data failed to materially move the pair lower, despite a strong move down in the ASX 200. Like EUR/USD, AUD/USD is testing its October downtrend and a sustained close could inspire fresh long positions. Last week's Commodity Futures Trading Commission data showed speculative net long positions had decreased 25% to 25,742 contracts, although given the strong correlation with the euro, the fact that euro net shorts are still near record levels should keep AUD/USD supported.

All eyes now fall on tonight's Italian bill/bond auction and, as we highlighted in EUR/USD section, a well bid auction should be good for all risk assets.