Aussie dollar declines further trading below US$0.66
Written by
Daily Currency Update
The Australian dollar is weaker this morning when valued against the Greenback currently trading at 0.6574 at time of writing. The AUD/USD pair declined by 0.40% in Friday's session, pressured by a modest US dollar recovery and skepticism surrounding China's economic stimulus initiatives. Weak manufacturing data from China, as indicated by the Purchasing Managers' Index (PMI) figures, has weighed on the Australian dollar, which is heavily influenced by China's economic health. China’s Caixin Manufacturing Purchasing Managers Index (PMI) increased to 50.3 in October, up from 49.3 in September, surpassing market expectations of 49.7. As China is a key trade partner for Australia, shifts in the Chinese economy could significantly influence Australian markets. On Friday Australia's Producer Price Index rose by 0.9% quarter-on-quarter in Q3, following a 1.0% increase in the prior period and surpassing market forecasts of a 0.7% rise. This marks the 17th consecutive period of producer inflation. On an annual basis, the PPI growth slowed to 3.9% in Q3, down from the previous quarter’s 4.8% increase. Looking ahead this week and all eyes will be on the Tuesday's Reserve Bank of Australia interest rate announcement. The official cash rate is expected to remain at 4.35%.Key Movers
The US dollar Index (DXY), which measures the value of the USD against a basket of six currencies, rebounded intraday despite the weak jobs data as annual wage inflation rose to 4%, indicating that inflationary pressures remain elevated. US hiring advanced at the slowest pace since 2020 while the unemployment rate remained low in October, a month distorted by severe hurricanes and a major strike at Boeing Co. Nonfarm payrolls increased 12,000 last month, and hiring over the previous two months was weaker than previously thought, suggesting the underlying labor market continues to cool. The unemployment rate held at 4.1% and hourly earnings ticked up, according to Bureau of Labor Statistics figures released Friday. Business activity in the US manufacturing sector continued to contract at a faster pace in October, with the ISM Manufacturing PMI dropping to 46.5 from 47.2 in September. This figure came in below the market expectation of 47.6. The Services PMI rose to 54.9 in October, indicating a strong expansion in the US service sector. All eyes this week will be on Tuesday's US presidential election. On Thursday, the Fed's policymakers, led by Chair Jerome Powell, are on track to cut their benchmark rate by a quarter-point, to about 4.6%, after having implemented a half-point reduction in September. Economists expect another quarter-point rate cut in December and possibly additional such moves next year. Over time, rate cuts tend to lower the costs of borrowing for consumers and businesses.Expected Ranges
- AUD/USD: 0.6500 - 0.6700 ▼
- AUD/EUR: 0.5950 - 0.6150 ▲
- GBP/AUD: 1.9450 - 1.9650 ▼
- AUD/NZD: 1.0900 - 1.1100 ▲
- AUD/CAD: 0.9050 - 0.9250 ▼