Australian dollar steady as China eases tariffs and domestic data stay resilient
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Daily Currency Update
The Australian dollar (AUD) held steady against the US dollar (USD) on Wednesday, with AUDUSD trading near US$0.6507 at the time of writing, showing little change on the day. The pair’s stability reflects a balance between supportive trade developments from China and cautious monetary signals from the Reserve Bank of Australia (RBA). Market sentiment toward the AUD improved after China’s Ministry of Finance announced that it would suspend certain tariffs on US agricultural imports, starting November 10. The decision includes the removal of 24% tariffs on several key US goods for a period of one year, while a 10% tariff will remain in place on others. The move is viewed as a positive step in stabilising global trade relations and could support demand for Australian commodities through indirect effects on global supply chains. On the domestic front, Australia’s latest economic indicators painted a mixed but broadly resilient picture. The S&P Global Services PMI for October rose slightly to 52.5, marking its 21st consecutive month of expansion and signalling continued strength in the services sector. Meanwhile, the Composite PMI eased modestly to 52.1 from 52.3, suggesting that growth momentum remains intact despite global headwinds and tight financial conditions. The RBA’s monetary policy stance continues to draw market attention. On Tuesday, the central bank opted to maintain its Official Cash Rate at 3.6%, reinforcing expectations that policymakers remain in a wait-and-see mode. Governor Michele Bullock emphasised that underlying inflation remains “a little too high,” with core inflation still above 3%. She reiterated the Bank’s “patient and watchful” approach, noting that while price pressures are easing gradually, the balance of risks requires caution before any policy adjustment. Looking ahead, investors will focus on upcoming US data releases and broader risk sentiment to gauge short-term direction for AUDUSD. While improved trade prospects and steady domestic growth support the AUD, persistent inflation concerns and a cautious RBA stance may limit near-term upside potential. For now, the pair appears comfortable consolidating around the mid-0.64 range, awaiting clearer catalysts for its next move.Key Movers
In the US, attention remains firmly on the ongoing government shutdown, now stretching into its sixth week. The Senate’s repeated failure to approve a temporary funding measure has heightened the risk of the longest federal funding lapse in US history. The prolonged stalemate continues to weigh on investor confidence, with the US Dollar Index (DXY) hovering around 100.20 amid a cautious market mood. The uncertainty has also reshaped expectations for Federal Reserve policy. According to the CME FedWatch tool, markets now assign a 69% probability to a rate cut in December—down sharply from 90% a week earlier—as investors weigh political gridlock against signs of resilience in parts of the economy. Labour market data offered a modest upside surprise. The latest ADP report showed that private sector employment increased by 42,000 in October, comfortably beating forecasts of a 25,000 gain. The data followed a revised decline of 29,000 in September, suggesting that hiring activity has regained some traction despite broader economic headwinds. ADP chief economist Nela Richardson noted that private-sector hiring “resumed modestly” in October, while pay growth has remained steady for more than a year. The figures point to a labour market that, while cooling, continues to show signs of stability—offering the Federal Reserve some reassurance as it navigates the delicate balance between curbing inflation and sustaining employment amid fiscal uncertainty.Expected Ranges
- AUD/USD: 0.6400 - 0.6600 ▲
- AUD/EUR: 0.5550 - 0.5750 ▲
- GBP/AUD: 1.9950 - 2.0150 ▼
- AUD/NZD: 1.1400 - 1.1600 ▲
- AUD/CAD: 0.9100 - 0.9300 ▼