Australian dollar falls despite the RBA’s aggressive policy outlook.
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.
Earlier this week, RBA Deputy Governor Andrew Hauser emphasized the country’s high workforce participation rate. that, while the RBA relies on data, it is not particularly concerned about it.
US dollar strengthened as traders closely monitor the Federal Reserve’s (Fed) interest rate trajectory.
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 is 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 said, “Under the Trump administration, we’re going to build an economy that lifts up all.” According to Reuters, “Americans” include African Americans, Hispanic Americans, and members of our huge Asian American and Pacific Islander communities, many of whom are here now.
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 has announced preliminary October US Purchasing Managers Index (PMI) numbers, which indicate good momentum across sectors. The composite PMI climbed to 54.3 from 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, up from 49.6 in September.
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 comparison to the August report, in which three districts recorded increase and nine showed stagnant activity.
In a post on the social media platform X, Federal Reserve Bank of San Francisco President Mary Daly noted that the economy is 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) decreased the 1-year Loan Prime Rate (LPR) to 3.10 percent. from 3.35%, and the 5-year LPR to 3.60% from 3.85%, both in line with estimates. 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.
