AUD makes new 12 month low as eyes turn to Fed policy meeting
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Daily Currency Update
The Australian dollar retreated through trade on Tuesday, marking a fresh 12-month low. Concern surrounding the resurrection of the US/China trade war and pessimism surrounding China’s growth outlook continue to weigh on the AUD forcing it below supports at US$0.6347 to a new 2024 low at US$0.6332. Copper and iron ore prices closed lower while oil declined across commodities as China's weaker demand and softer activity data hampered demand. The AUD continues to test lower lows and appears poised to extend its decline below US$0.63. Our attention today turns to the latest European inflation data and the Federal Reserve policy meeting. We expect the Fed will cut rates by 25 basis points. As we look ahead to 2025, and the promise of new tariffs coupled with a resilient economic backdrop the outlook for the Fed is uncertain. The September dot plot suggested the Fed would look to issue 100 points of cuts in 2025, while current market pricing has just 60 points marked in. Any hint the Fed will shift toward a more measured cutting cycle will only further weigh on the AUD.Key Movers
While the USD is little changed through the last 24 hours there is plenty to digest across major currencies. The Great British pound outperformed all other majors, pushing back above US$1.27 following a stronger-than-anticipated UK employment and wage print. While core global yields retreated UK gilts rose after UK wages accelerated for the first time in more than 12 months. The uptick in wages adds some uncertainty surrounding tonight’s CPI print and prompted investors to temper rate cut expectations in 2025. With the GBP on the front foot, the Japanese yen retreated countering gains and allowing the DXY index to track sideways. With Canadian dollar joined the AUD and NZD in tracking lower, giving up half a percent. While core CPI inflation printed largely in line with expectations Finance Minister Freeland's shock resignation cast a pall on Prime Minister Trudeau's future and the outlook for the domestic economy.Our attention now turns to a packed macro docket. European and UK inflation data lead the line while the Fed December policy meeting and statement round out the day. We expect markets will remain volatile leading into and out of the respective prints with great focus on any Fed guidance for 2025.
Expected Ranges
- AUD/USD: 0.6280 - 0.6400 ▼
- AUD/EUR: 0.6000 - 0.6100 ▼
- GBP/AUD: 1.9800 - 2.0100 ▲
- AUD/NZD: 1.0980 - 1.1080 ▼
- AUD/CAD: 0.9000 - 0.9100 ▼