Australian dollar falls despite the RBA’s aggressive policy outlook. 

The Australian Dollar (AUD) fell against the US Dollar (USD) on Thursday. However, the AUDUSD pair gained some ground as the US Dollar (USD) fell marginally due to a minor drop in US Treasury yields. The hawkish tone around the Reserve Bank of Australia (RBA) could support the Australian dollar.

RBA Deputy Governor Andrew Hauser underlined earlier this week the country’s robust labor participation rate and emphasized that, although the RBA relies It isn’t overly focused on data.

Australian dollar falls as the US dollar rises on less dovish Fed mood.

The US dollar has strengthened as traders closely monitor the Federal Reserve’s (Fed) interest rate trajectory, with growing predictions that the central bank will be less aggressive in cutting rates than previously assumed. Furthermore, the Greenback boosted by increased speculation about former President Donald Trump’s likely second term in the approaching US presidential election in November. On Friday, traders will most likely focus on US Durable Goods Orders and the Michigan Consumer Sentiment Index.

On Thursday, Republican nominee Donald Trump used his well-known reality show slogan at a gathering in Las Vegas, Nevada. Trump declared, “Under the Trump administration, we’re going to construct an economy that lifts up all Americans, including African Americans, Hispanic Americans, as well as members of our wonderful Asian American and Pacific Islander communities, many of whom are present today,” according to Reuters.

Daily Market Movers: Australian Dollar Declines Ahead of US Presidential Election.

According to the CME FedWatch Tool, the Fed is 97% likely to decrease interest rates by 25 basis points in November, with no expectation of a greater cut of 50 basis points.

At an event in Georgia that drew thousands of supporters, Vice President Kamala Harris was joined by rock legend Bruce Springsteen, entertainer Tyler Perry, and former President Barack Obama.

S&P Global announced preliminary October US Purchasing Managers Index (PMI) numbers, which indicate good momentum across sectors. The composite PMI increased to 54.3, up from The previous value was 54.0. The Services PMI was 55.3, higher than the expected 55.0 and up slightly from 55.2 the previous month. Meanwhile, the Manufacturing PMI rose to 47.8, exceeding the projected 47.5 and improving on the previous figure of 47.3.

Australia’s Judo Bank Composite PMI increased marginally to 49.8 in October.

Australia’s Judo Bank Composite PMI increased marginally to 49.8 in October, up from 49.6 in September, indicating a second consecutive month of decrease in private sector output. The Services PMI increased to 50.6 from 50.5, indicating the ninth consecutive month of growth, while the Manufacturing PMI fell to 46.6 from 46.7, continuing its downward trend.

On Wednesday, the Fed Beige Book revealed that economic activity was “little changed in nearly all Districts,” in contrast with August’s report, which Three districts recorded growth, while nine indicated stagnant activity.

In a post on the social media platform X, Federal Reserve Bank of San Francisco President Mary Daly noted that the economy plainly in better shape, with inflation down considerably and the labor market returning to a more sustainable course.

On Monday, Federal Reserve Bank of Minneapolis President Neel Kashkari stated that the Fed is closely watching the US job market for signals of rapid destabilization. Kashkari cautioned investors to expect gradual rate reduction in the coming quarters, implying that any monetary easing would be moderate rather than forceful.

The People’s Bank of China (PBoC) has decreased the 1-year Loan Prime Rate (LPR) to 3.10% from 3.35%, and the 5-year LPR fell to 3.60% from 3.85%, as expected. Lower borrowing costs are expected to boost Chinese domestic economic activity, potentially raising demand for Australian goods.

In a report last week, National Australia Bank updated its Reserve Bank of Australia (RBA) projections. “We have brought forward our expectations for the timing of rate cuts, now anticipating the first cut in February 2025, instead of May,” according to the bank. They continue to forecast steady reduction, with rates likely to fall to 3.10% by early 2026.