Home Daily Commentaries AUD extends losses as markets temper bets for Fed rate cut in December

AUD extends losses as markets temper bets for Fed rate cut in December

Matt Richardson
Written by
Matt Richardson

Matt Richardson

OFXpert

Matt provides expertise in currency risk management to his clients, drawing from his 14 years of experience in foreign exchange.

| Friday 15 November, 2024

Daily Currency Update

Another day and another new post-election low for the AUD. With US treasury yields enjoying further gains and the US dollar DXY index making a new 2024 high the AUD downtrend continued. Having broken below US$0.65 on Wednesday the AUD extended toward US$0.6450 marking fresh lows at US$0.6453 before finding support. Domestic labour market data printed largely in line with consensus expectations, however, the unemployment rate held steady at 4.1%, comfortably below the RBA’s forecasted 4.3%. Stability across the employment landscape does afford the RBA more license to leave rates higher for longer in its bid to cull inflation. Most analysts are now pricing in a first rate cut in May 2025. This however did little to help support the AUD as US momentum remains in vogue, while commodity prices and China growth concerns generate added downside risk. Iron ore led declines across key industrial commodities down 2.2% for the day.

Our attentions turn now to China Activity data, EU and UK economic forecasts and US retail sales.

Key Movers

The US dollar extended gains Thursday as US treasury yields edged higher. US yields edged nearer 4.5% touching 4.48% overnight before settling just below 4.45%. Comments from Fed Chair Powell helped drive gains as he noted in an address that the recent performance of the US economy has been “remarkably good”. Stability across the labour market and key consumer metrics gives policy makers license to adopt a careful approach to further interest rate cuts forcing analysts to temper bets for a December rate adjustment. With the USD advancing against all G10 majors the DXY index poked its head above 107, marking a new 12 month high. The JPY and CHF were among the worst performers while the Euro eyed a break below 1.05 and Sterling dipped below 1.2650.

We expect momentum to remain with the USD as our attentions turn now to China Activity data, EU and UK economic forecasts and US retail sales.

Expected Ranges

  • AUD/USD: 0.6400 - 0.6500 ▼
  • AUD/EUR: 0.6080 - 0.6180 ▼
  • GBP/AUD: 1.9500 - 1.9800 ▲
  • AUD/NZD: 1.1000 - 1.1100 ▲
  • AUD/CAD: 0.9000 - 0.9100 ▼

Written by

Matt Richardson

OFXpert

As a Senior Corporate Client Manager, Matt provides expertise in currency risk management to his clients, drawing from his 14 years of experience in foreign exchange. Matt has clients who he has been working with for over a decade, a testament to his knowledge and dedication in the field. Matt is also a regular contributor on Ausbiz, offering clear and precise updates on currency market trends, showcasing his ability to interpret complex financial data into actionable insights.