Australian Dollar benefits from the hawkish tone around the next RBA monetary policy announcement.
Australian Dollar (AUD) gains momentum against the US Dollar despite the release of worse Purchasing Managers Index (PMI) data on Monday. The AUDUSD pair projected to appreciate as the People’s Bank of China (PBoC) injects cash into the banking system. As close trading partners, changes in the Chinese economy can have a significant impact on Australian markets.
The People’s Bank of China (PBoC) pumped CNY 74.5 billion in cash into the banking sector through a 14-day reverse repo, with the interest rate reduced to 1.85% from 1.95%. Furthermore, the Chinese central bank pumped CNY 160.1 billion in liquidity through a 7-day reverse repo, keeping the rate constant at 1.7%.
The AUD gotten support when the PBoC infused liquidity into the banking system.
The Australian dollar (AUD) also gain ground due to hawkish predictions for the Reserve Bank of Australia’s (RBA) upcoming interest rate decision on Tuesday. The RBA expected to maintain the Official Cash Rate (OCR) at 4.35%, backed by strong labor market statistics and continued inflationary pressures.
The US Dollar (USD) may fall as Federal Reserve (Fed) policymakers expect an additional 75 basis points (bps) of rate cuts in 2024. Following an aggressive 50 basis point Last week, rate lowered to a range of 4.75-5.00%.
Daily Digest Market Movers: Australian Dollar stays strong due to hawkish mood around the RBA.
Australian Dollar (AUD) gains momentum against the US Dollar despite the release of worse Purchasing Managers Index (PMI) data on Monday. Australian Treasurer Jim Chalmers attempting to form a new monetary policy board at the Reserve Bank of Australia, but he needs the Greens Party’s support to proceed. The Greens have declared that they will only support changes to the RBA if there is a commitment to lower interest rates.
Philadelphia Fed President Patrick Harker noted on Friday that the US central bank has successfully navigated a difficult economic environment in recent years. Harker compared monetary policy to driving a bus, which requires a delicate balance of speed.
Australia’s Judo Bank Composite PMI fell to 49.8 in September from 51.7. in August.
Australian Dollar (AUD) gains momentum against the US Dollar despite the release of worse Purchasing Managers Index (PMI) data on Monday.
Australia’s Judo Bank Composite PMI fell to 49.8 in September from 51.7. in August, showing a contraction in business activity as weaker growth in the services sector failed to offset a greater decline in industrial output. The Services PMI fell to 50.6 in September from 52.5 the previous month, while the Manufacturing PMI fell to 46.7 from 48.5 in August.
On Friday, the People’s Bank of China (PBoC) decided to leave its one-year and five-year Loan Prime Rates (LPRs) unchanged at 3.35% and 3.85%, respectively.
Commonwealth Bank (CBA) has shifted its projection for the first Reserve Bank of Australia rate drop by 25 basis points from November 2024 to December 2024. This shift follows a strong employment rate and the central bank’s sustained “hawkish” attitude, according to Yahoo Finance.
Australian Employment Change came in. at 47.5K in August, down from 48.9K (updated from 58.2K) in July, but still significantly above the average projection of 25.0K. According to figures issued by the Australian Bureau of Statistics (ABS), the unemployment rate stayed stable at 4.2% in August, matching both expectations and the previous month’s result.
Michele Bullock, Governor of the Reserve Bank of Australia (RBA), underlined. That considering rate decreases is premature given the continually high inflation. Additionally, RBA Assistant Governor Sarah Hunter stated that, while the labor market is tight, wage growth appears to peaked and projected to slow further.
