Aussie dollar trades below 65 US cents; markets eye upcoming PMI data
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Daily Currency Update
The Australian Dollar (AUD) continued its decline on Tuesday, slipping around 0.70% to trade near US$0.6487 against the U.S. Dollar (USD) at the time of writing. The move reflects a cautious mood in the market after the Reserve Bank of Australia (RBA) opted to keep its Official Cash Rate (OCR) unchanged at 3.6%, a decision that was widely expected by investors. While the decision itself didn’t come as a surprise, the RBA’s accompanying statement set the tone for a softer Aussie. Policymakers highlighted that inflation remains elevated, even though there are early signs that domestic demand is easing. This balanced message reinforced the view that the RBA is treading carefully acknowledging progress in cooling prices but not yet confident enough to signal any near-term policy shifts. Recent data has complicated the picture for the central bank. Australia’s Consumer Price Index (CPI) rose 1.3% in the third quarter, higher than the market forecast of 1.1%. This stronger reading suggested that inflationary pressures remain sticky, particularly in services and housing costs. However, other indicators, such as retail sales and consumer sentiment, have hinted at a slowdown, suggesting that higher interest rates are gradually weighing on household spending. In global markets, the U.S. Dollar remains firm, supported by steady demand for safe-haven assets and resilient U.S. economic data. This has added extra pressure on the AUD/USD pair, which tends to weaken when investors favor the greenback amid uncertainty or risk aversion. Looking ahead, traders are turning their attention to the upcoming Australian Purchasing Managers’ Index (PMI) figures due later today. The PMI data will offer fresh clues about business activity in both the manufacturing and services sectors. A stronger-than-expected reading could help the Aussie regain some ground, signaling that the economy remains resilient despite tighter financial conditions. Conversely, a weaker result might reinforce concerns about slowing growth and keep the currency under pressure. Overall, the Australian Dollar remains sensitive to both domestic data and global market sentiment. With the RBA taking a “wait-and-see” approach, near-term movements in the AUD/USD pair are likely to hinge on economic indicators and shifts in expectations for future rate decisions—both at home and in the United States. As of now, traders will be watching closely to see if upcoming data can provide the Aussie with a much-needed boost after its recent slide.Key Movers
The US Dollar Index (DXY) continued its strong upward trend this week, marking its fifth consecutive day of gains. This steady climb pushed the index past the closely watched 100.00 level, a milestone that often carries psychological importance for traders and investors. The move places the dollar at its highest point in about six months, reflecting growing confidence in the U.S. currency despite ongoing political and economic uncertainties. On Tuesday, the dollar maintained its strength as traders kept a close eye on the Federal Reserve’s next policy decision. After last week’s Fed meeting, market participants have been trying to gauge whether the central bank will raise interest rates again or hold steady for the rest of the year. Many analysts now believe the Fed is likely to keep rates unchanged in December, especially as inflation continues to show signs of cooling and economic data remains mixed. This expectation has provided solid support for the greenback, since a pause in rate hikes signals stability and reassures investors that the U.S. economy remains on relatively firm ground. At the same time, political tensions in Washington are adding another layer of uncertainty. The U.S. government remains in a partial shutdown, with lawmakers unable to agree on a new funding bill. This ongoing political gridlock has yet to significantly dent the dollar’s momentum, but it does create an air of caution in financial markets. Investors are watching closely for any signs of progress, as an extended shutdown could begin to weigh on consumer confidence and overall economic activity. Despite these concerns, the U.S. dollar’s resilience stands out compared to other major currencies. The euro and the Japanese yen, for instance, have both struggled to gain ground amid weaker regional data and dovish signals from their respective central banks. As a result, global investors continue to view the dollar as a safe haven, especially during times of political or economic uncertainty. In summary, the U.S. dollar is riding a wave of strength driven by confidence in the Federal Reserve’s steady approach and the relative health of the U.S. economy. Even as Washington faces political challenges, the dollar’s momentum shows that traders remain optimistic about the U.S. outlook—at least for now.Expected Ranges
- AUD/USD: 0.6400 - 0.6600 ▼
- AUD/EUR: 0.5600 - 0.5800 ▼
- GBP/AUD: 1.9950 - 2.0150 ▼
- AUD/NZD: 1.1400 - 1.1600 ▲
- AUD/CAD: 0.9050 - 0.9250 ▼