USD Falls on Increased Rate Cut Bets

AUD

The AUD opens mixed against the majors with zero local or Chinese data released over the past 24 hours. A positive day for Asian equities saw the Nikkei trade +0.6%, the Shenzhen +0.2% and the Hang Seng unchanged. Locally, the ASX gained +0.8% with both energy and materials sectors leading the pack at +1.3%. To commodities, Silver and Iron Ore were flat yesterday, while Gold gave up -0.3% and Crude Oil fell -1.4%. Australia reports June trade figures at 11:30am today. The Trade Surplus through May is running more than a third lower year-on-year. Exports have been week, except for a 5.9% surge in March. Imports have risen by an average of 0.7% month-on-month through May this year. The RBA will mee next week and markets are confident that a 25bps cut will be delivered, taking the Cash Rate to 3.60%. 
 

USD

AUD/USD has gained 0.9% from Tuesday's lows, opening at 0.6505, touching 1-week highs of 0.6508 earlier this morning. This comes after the USD weakened as traders bet that the Federal Reserve will cut rates more times than previously expected this year, following weaker than expected U.S. jobs data for July. Employment growth has been weaker than expected, while the non-farm payrolls count for the past two months was revised down by a massive 258k jobs, suggesting a sharp deterioration in labour market conditions. The Greenback fell sharply after the downward revision, paring gains from what had been a relatively strong July for the currency. Markets are now pricing a 95% probability of a 25bps cut at the Fed's September meeting, up from 48% a week ago. In total, traders currently see 62bps in cuts this year. Another solid session for equity markets overnight saw the Nasdaq close +1.2%, the S&P 500 +0.7%, and the Dow Jones +0.2%. Tonight, weekly Unemployment Claims and FOMC Member Bostic speaks.
 

EUR

AUD/EUR opens lower at 0.5574, falling 0.6% from yesterday's highs, with the Euro strengthening off the back of USD weakness, driven by increased certainty around future interest rate cuts from the Federal Reserve later his year. The DAX and CAC gained +0.3% and +0.2%. This afternoon, we'll see German Industrial Production and Trade Balance data. 
 

GBP

AUD/GBP opens flat 0.4869, gaining 0.35% in yesterday's session, touching 0.4887, then falling in the early hours to current levels. The FTSE gained +0.2%. Little UK data yesterday. Tonight, the Bank of England is widely expected to lower their key interest rate by 25bps to 4.00%, with the move justified by a creaking UK jobs market. The UK Unemployment Rate has risen a tad this year and payrolled employee numbers have fallen in seven out of the past eight months. Only one of nine BOE voting members are expected to opt for an interest rate hold. If the vote split lands off-expectations, GBP volatility is expected.
 

NZD

AUD/NZD opens a tad higher at 1.0965, touching 3-week highs of 1.0980 yesterday morning before falling 0.3% after the NZ Unemployment Rate was released tighter than expected at 5.2% (exp. 5.3%, prev. 5.1%). The data showed 2,000 jobs were lost in Q2 2025 and unemployment rose to the highest point since 2020. The labour market is softening, a little lower than expected, and a 25bps interest rate cut is expected at the next Reserve Bank of New Zealand meeting on 20 August. Today, we'll see quarterly inflation expectations for NZ.