Aussie dollar bounces back after hitting 7-week low
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Daily Currency Update
The Australian Dollar (AUD) clawed back some ground against the US Dollar (USD) on Tuesday after dipping earlier to its lowest level since late August. At one point, AUD/USD was down near US$0.6440, but it’s since recovered to around US$0.6481 — still down about 0.38% on the day but showing signs of life. The early weakness came as fresh concerns about a US-China trade flare-up rattled markets. Given Australia’s close economic ties to China, any tension between the two superpowers tends to weigh heavily on the Aussie. But as the day went on, the US Dollar lost a bit of steam, giving the AUD room to rebound. The pullback in the Greenback followed a more dovish tone from the Federal Reserve, with investors starting to believe the Fed might be done raising interest rates for now. That shift helped support riskier currencies like the Aussie, despite the broader caution in the markets. On the local front, the Reserve Bank of Australia (RBA) released the minutes from its September 30 meeting. No surprises there — the RBA left interest rates on hold at 3.60%. But the central bank did flag a few concerns. Officials noted that inflation, especially in housing and services, might be stickier than hoped in the third quarter. They also pointed out that monetary policy is still probably "a little restrictive," meaning it could be holding back growth more than necessary. That said, the RBA made it clear they’re not rushing into any decisions. Future rate moves will depend on the data, and the board plans to stay cautious. They also noted that housing credit and prices are picking up again, suggesting that earlier rate cuts are still working their way through the system. All in all, it was a choppy day for the Aussie, with global headlines and central bank signals tugging it in both directions. For now, traders will keep a close eye on US economic data and any new developments in US-China relations, which could have ripple effects for Australia’s economy and currency.Key Movers
Federal Reserve Chair Jerome Powell offered a measured and mostly neutral assessment of the U.S. economy during his speech and subsequent Q&A session in Philadelphia on Tuesday, signaling no major shift in the central bank's near-term policy outlook. Speaking at an event focused on the economic outlook, Powell acknowledged that recent data suggests the U.S. economy “may be on a somewhat firmer trajectory than expected,” but stopped short of signaling any change in the Fed’s cautious, data-dependent approach. He reiterated that monetary policy decisions will continue to be made “meeting by meeting,” emphasizing the Fed’s commitment to staying flexible amid a mixed economic backdrop. Following Powell’s remarks, market expectations for a rate cut at the Fed’s upcoming October 29 policy meeting remained firmly in place. According to futures pricing, traders are assigning a 96% probability to a 25-basis-point rate cut — suggesting that investors interpreted his comments as neither more hawkish nor more dovish than before. Powell noted that the overall economic picture has not changed significantly since the Federal Open Market Committee’s (FOMC) last meeting in September. “Based on the data we have, the outlook for employment and inflation does not appear to have changed much,” he said. Still, he acknowledged a slight upward revision in the Fed’s view of current economic strength, saying that “economic activity might be somewhat firmer than previously expected.” At the same time, Powell cautioned that risks to both the labor market and inflation remain on the radar. While job growth has been resilient, recent indicators suggest that labor market conditions may be softening at the margins. “We are also seeing signs that inflationary pressures, while moderating, are still a concern,” he added. The Fed chair’s comments reflect a central bank walking a fine line — aiming to support the economy without prematurely declaring victory over inflation. His careful messaging suggests the Fed is content to hold its current stance while continuing to evaluate incoming data. Market participants will now turn their focus to upcoming economic releases — including the latest retail sales, jobless claims, and inflation prints — for further clues on the Fed’s policy direction ahead of the October meeting.Expected Ranges
- AUD/USD: 0.6400 - 0.6600 ▼
- AUD/EUR: 0.5500 - 0.5700 ▼
- GBP/AUD: 2.0500 - 2.0700 ▲
- AUD/NZD: 1.1200 - 1.1400 ▲
- AUD/CAD: 0.9000 - 0.9200 ▼