Aussie dollar trades below US$0.68
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Daily Currency Update
The Australian dollar is slightly weaker this morning when valued against the Greenback currently trading at 0.6789 at time of writing. The AUD/USD declined by 0.40% in Friday's session, pressured by growing expectations of interest rate cuts by the Federal Reserve (Fed). Despite the mixed Australian economic outlook, the Reserve Bank of Australia's (RBA) hawkish stance on inflation has led to market expectations of a modest 25-basis-point rate cut in 2024. Last week on the data front Australia’s Unemployment Rate remained at 4.2% in August, compared with the expectations and the previous figure of 4.2%, according to the official data released by the Australian Bureau of Statistics (ABS) on Thursday. Furthermore, the Australian Employment Change arrived at 47.5K in August from 48.9K (revised from 58.2K) in July, compared with the consensus forecast of 25.0K. Looking ahead this week and today we will see the release of the Flash Manufacturing and Services PMI's. On Tuesday all eyes will be on the Reserve Bank of Australia's (RBA) interest rate decision which is expected to leave rates on hold at 4.35%. On Wednesday the Australian Bureau of Statistics will release the Consumer Price Index (CPI) figures for the month. Consumer prices account for a majority of overall inflation. Inflation is important to currency valuation because rising prices lead the central bank to raise interest rates out of respect for their inflation containment mandate.Key Movers
The US dollar remains under pressure as expectations grow for additional rate cuts by the US Federal Reserve by the end of 2024. The latest dot plot projections indicate a gradual easing cycle, with the median rate for 2024 revised down to 4.375% from the June forecast of 5.125%. The Fed delivered its first interest rate cut decision in more than four years last Wednesday, in which it reduced its key borrowing rates by 50 basis points (bps) to 4.75%-5.00%. The number of Americans filing new applications for unemployment benefits dropped to a four-month low last week, pointing to solid job growth in September and offering confirmation that the economy continued to expand in the third quarter. Initial claims for state unemployment benefits dropped 12,000 to a seasonally adjusted 219,000 for the week ended Sept. 14, the lowest level since the middle of May, the Labor Department said last Thursday. Economists polled by Reuters had forecast 230,000 claims for the latest week. The stock market took a breather Friday with the Dow Jones Industrial Average eked out a 0.1% gain to close at a record high for the second consecutive session. The S&P 500 slid 0.2% from its own record high. The Nasdaq Composite, about 4% off its all-time high, dipped 0.4%. All three indexes advanced about 1.5% over the week. Gold prices climbed past $2,600, recording new all-time highs amid increasing speculation that the Federal Reserve (Fed) will continue to lower borrowing costs.Expected Ranges
- AUD/USD: 0.6700 - 0.6900 ▼
- AUD/EUR: 0.6000 - 0.6200 ▲
- GBP/AUD: 1.9400 - 1.9600 ▼
- AUD/NZD: 1.0800 - 1.1000 ▲
- AUD/CAD: 0.9100 - 0.9300 ▼