Aussie dollar rises on renewed global optimism as markets await key inflation data
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Daily Currency Update
The Australian dollar started the week on a strong note, climbing 0.70% to around US$0.6557 against the US dollar on Monday as investors showed renewed appetite for riskier, growth-linked currencies. The improvement in sentiment was fuelled by signs of progress in US–China trade relations, which lifted hopes for stronger global trade and demand for commodities, key drivers of Australia’s export-focused economy.The Aussie, often seen as a barometer of global growth, tends to benefit when optimism returns to the markets. Domestically, attention now turns to Australia’s third-quarter Consumer Price Index (CPI) data due on Wednesday, which will provide important clues about the inflation trend and influence expectations for the Reserve Bank of Australia’s (RBA) next policy steps. A higher-than-expected reading could reinforce the case for further interest rate hikes, while a softer result may support the argument for keeping rates steady.
In a speech on Monday, RBA Governor Michelle Bullock reiterated the central bank’s commitment to bringing inflation back within target while maintaining a strong labour market. She expressed cautious optimism, noting that employment conditions could start to improve as early as next month, reflecting her confidence in the underlying resilience of the Australian economy.
Overall, with global sentiment improving and a crucial domestic data release on the horizon, traders are preparing for an eventful week that could set the tone for the Aussie’s next big move.
Key Movers
On the US front, all eyes are now on the Federal Reserve’s monetary policy decision scheduled for Wednesday, a key event that could set the tone for global markets heading into November. Investors widely expect the Fed to deliver a 25-basis-point rate cut, marking its second consecutive reduction and lowering the benchmark federal funds rate to a range of 3.75%–4.00%.The move would signal that the central bank is maintaining a cautious but supportive stance toward the economy as growth shows signs of moderation. This dovish policy outlook has continued to weigh on the US dollar, which has been under pressure in recent sessions amid growing uncertainty about the Fed’s longer-term trajectory.
Within the central bank, policymakers remain split over how aggressively to proceed with easing. Some officials have argued that a faster pace of rate cuts is necessary to offset a cooling labour market and support consumer spending, while others caution that moving too quickly could risk reigniting inflation, which remains stubbornly above the 2% target.
The upcoming policy statement and Fed Chair Jerome Powell’s press conference will be closely scrutinised for clues about the balance of these internal debates. Should Powell strike a more hawkish tone, emphasising inflation risks or signalling a slower pace of cuts, it could offer the Greenback a short-term lift as markets recalibrate expectations. However, if the Fed’s message leans firmly toward continued easing, the US dollar may remain under downward pressure, particularly against higher-yielding and growth-sensitive currencies.
Overall, this week’s decision represents a delicate balancing act for the Fed as it seeks to navigate between sustaining economic momentum and keeping inflation in check. Investors are bracing for potential volatility across currency and bond markets as Powell’s remarks shape the outlook for US monetary policy in the months ahead.
Expected Ranges
- AUD/USD: 0.6450 - 0.6650 ▲
- AUD/EUR: 0.5500 - 0.5700 ▲
- GBP/AUD: 2.0250 - 2.0450 ▼
- AUD/NZD: 1.1250 - 1.1450 ▲
- AUD/CAD: 0.9050 - 0.9250 ▲