USD Slides on Fears of Prolonged Shutdown
AUD
The Australian Dollar opens higher against most the majors bar the NZD and GBP following the Labour Day weekend. Nothing major to note over the weekend for local data with only MI Inflation Gauge m/m yesterday showing a 0.4% increase in September 2025, rebounding from a 0.3% fall in August. The rebound reinforces signs that Q3 inflation may prove hotter than expected, even as the RBA seeks to maintain price growth within its 2–3% target range. Asian equities finished the day mixed, Hang Seng -0.7%, Shenzhen +0.5, while the Nikkei traded +4.75%, while the ASX 200 closed slightly down by -0.1%, as technology and health care sectors lead losses of -1.4% and -0.9%. Commodities closed mostly in the green with Gold +0.2%, Silver +0.1%, Iron Ore +0.1%, while Copper closed -1.2%. It will be a quiet week for domestic data with Westpac Consumer Sentiment, and ANZ Job Advertisements m/m set to be released later this morning, however, the next main piece of data this week will be on Friday morning with RBA Gov Bullock due to testify about the Supplementary Budget Estimates 2025-26 before the Senate Economics Legislation Committee, in Canberra.
USD
AUD/USD opens slightly higher this morning at 0.6617 after the Greenback retreated on Friday, posting multi-week losses against major currencies, as uncertainty surrounding a U.S. government shutdown clouded the outlook and delayed key data releases, such as payrolls, critical for gauging the economy's direction. ISM Services PMIs also missed forecasts coming through at 50.0 from 51.8. US equities were subdued into the close with the Nasdaq trading +0.8%, the S&P 500 +0.4%, and the Dow Jones -0.2%. The U.S. Trade Balance for August is scheduled to be published later tonight, subject to the government shutdown. In July, the trade deficit widened by 33% to $78.3B, largely due to higher imports following August’s tariff escalation. For August, the deficit is expected to narrow to 61.4B.
EUR
AUD/EUR opens higher this morning at 0.5650 after some mixed Services PMI data, alongside with Industrial Producer Prices dropping by 0.3% in the Eurozone. ECB President Lagarde also caught headlines after highlighting the Euro’s ability to hold up amidst uncertainty, reinforcing the belief that headwinds to growth should ease next year and the labour market remains a key source of strength. Lagarde also flagged her belief that the disinflation process is over. Eurozone equities closed mixed with the DAX flat, while the CAC closed in the red -1.4%. Earlier this morning ECB president Lagarde also testified before the Committee on Economic and Monetary Affairs of the European Parliament, stating they are data dependent on rates, and are still anticipating growth. German Factory Orders m/m and the French Trade Balance will also be released later this evening.
GBP
AUD/GBP opens flat at 0.4907 after the Bank of England’s Governor Bailey’s dovish commentary on the challenges to financial stability late Friday night. UK equities saw the FTSE close in the red -0.1%. The Halifax HPI m/m will also be released later this evening.
NZD
AUD/NZD opens flat at 1.1331 despite both ANZ Commodity Prices m/m and NZIER Business Confidence coming through lower than forecast. Nothing set for release from our Kiwi neighbours today, however, tomorrow will be their main release of the month with their Official Cash Rate decision with forecasts pointing to a 25-basis point cut from 3% to 2.75% as after their last Monetary Policy Statement in August, the RBNZ indicated the likelihood of two further 0.25% cuts being necessary (from 3.00% to 2.50%). The RBNZ decided to deliver this message as they believe that there is considerable excess capacity in the economy, therefore the economy can expand without pressuring resources, so inflation should not increase.