Australian Dollar gained strength as a result of the US Dollar’s decline
The Australian Dollar (AUD) extended its advances for the third day in a row. The Aussie pair benefited from the US Dollar’s (USD) collapse. Following a drop in US Treasury rates.
According to Australia’s FSR assessment, despite increasing global and domestic risks, Australian banks remain well-positioned.
The Reserve Bank of Australia’s (RBA) Financial Stability Review (FSR) for October 2023. Predicts higher global financial stability risks owing to adverse macroeconomic conditions.
Since 2021, the rise in inflation and interest rates has put a burden on personal and company finances. Not only in Australia, but worldwide. Prolonged high levels of inflation and interest rates represent a major danger of credit quality degradation. Perhaps prompting lenders to decrease loan availability.
Despite increased global and domestic risks. Australian banks are well-positioned to continue providing credit to the economy. According to the research.
Furthermore, President Biden and Chinese leader Xi Jinping are planning a meeting in San Francisco in November. Signifying a move to normalize relations between the world’s two largest economies.
This probable summit follows their November encounter in Bali. Indonesia, when both presidents emphasized the significance of face-to-face diplomacy and voiced optimism for the rebuilding of US-China ties.
The US Dollar Index (DXY) aims to break the two-day losing streak. The losing skid continues. The index has continued to fall from an 11-month high due to a drop in US Treasury rates. However, Thursday’s unemployment figures revealed a tight job market in the United States (US). The impending US Nonfarm Payrolls and Average Hourly Earnings will be watched for more confirmation on Friday.
Daily Summary: The Australian Dollar is consolidating ahead of the Nonfarm Payrolls in the United States
The RBA’s FSR report confirms that Australian banks are well-positioned to continue credit supply to the economy, even in the face of increased global and local risks.
Australia’s MoM trade balance improved in August, hitting 9,640 million, above market forecasts of 8,725 million. The reading for July was 8,039 million.
Expectations are that Australia’s central bank will raise interest rates. The rate is expected to reach 4.35% by the end of the year. This forecast corresponds to the steady rise in inflation over the objective.
Michele Bullock, the newly appointed governor of the RBA, stressed the need for more tightening of monetary policy in her maiden monetary policy statement following the interest rate decision.
Bullock stated that recent statistics point to inflation returning to the target range. While inflation in Australia has peaked, it remains high and is anticipated to remain so for some time.
Initial Jobless Claims in the United States jumped to 207K from 205K the previous week, above the market consensus of 210K. This indicates that labor market conditions remain tight.
Job cuts at US Challenger have occurred. Falling drastically from 75.151K in August to 47.457K in September.
The 10-year US Treasury yield is close to its highest level since 2007.
Investors are looking for proof of a tight labor market in the US NFP data.
Traders are anticipating the release of US Nonfarm Payrolls and Average Hourly Earnings on Friday. Positive data might lead to additional USD gains and increased volatility in the bond market.
