AUD steadies as attentions turn to US payroll data ahead of RBA next week

Key Movers

All eyes were on the Bank of England overnight as it met and delivered a 25 basis point rate cut. The move was largely anticipated but the commentary that follow reverberated across the market and drove the pound lower. Officials revised inflation expectations higher and growth forecasts lower, while some members thought it appropriate to issue a larger 50 point cut. The dovish tone forced the GBP as low as 1.2361, before paring losses and closing the day a half percent lower. In other news, the yen continued its upward run, advancing a further 0.8% as markets continue to ride stronger wage data higher. BoJ policy maker Tamura noted that following improved wage conditions it would be appropriate to issue at least two more rate adjustments, lifting rates to 1% before the end of the year. The yen pushed the USD back below 152 and 151.50, marking 151.38, up 2.5% for the week. US yields fell after treasury secretary Scott Bessent announced on Fox news that it is the administrations focus to bring rates down, in lieu of influencing the Fed and Fed funds rate. By targeting an expansion in energy supply to help lower inflation pressures and reducing the budget deficit, yield rates should fall. Having rallied, amid inflation concerns fuelled by tariffs, a shift in yield momentum could weigh on the USD through the near term.

Our attentions turn now to US payroll data. We expect a healthy read with unemployment to remain steady but are keenly attuned to any miss and/or revisions in of past month's data.