Dollar Wobbles as Markets Anticipate Fed Rate Cut
AUD
AUD is marginally up, holding near recent highs as softer USD momentum and firmer China sentiment support the pair, while RBA easing expectations limit upside. Asian equities finished the day mixed, Nikkei +0.3%, Shenzhen -0.2% and Hang Seng -0.1%. The ASX 200 climbed +0.3% as energy and consumer discretionary lead the pack at +0.9% and +0.8%. Little local flow today, attention turns to tomorrow’s employment data, with the Unemployment Rate expected at 4.2%, alongside Q2 GDP and remarks from Governor Bullock, which together could provide the next real direction for the currency.
USD
The AUD/USD opens at fresh yearly highs of 0.6687, with the USD continuing to trade with a softer tone after recent losses, pressured by a break below July’s intra-month highs and growing Fed-cut odds ahead of the FOMC window. Another subdued session on Wall St. saw the Dow Jones close -.3%, the S&P 500 -.1% and the Nasdaq unchanged on the day. Recent Empire State Manufacturing data missed and last night's US Retail Sales were stronger than expected. In tomorrow's early hours, the Federal Reserve will decide on U.S> interest rates. The central bank is expected to deliver the first interest rate cut for 2025, with a further 2 cuts currently expected by year-end. The overnight commentary from Fed Chair J Powell will be critical in determining near-term USD movement.
EUR
AUD is marginally down against the EUR. The euro is trading firmer as the broader USD pullback and a narrowing US–Germany yield gap underpin the move. European equities were generally firmer and euro-area industrial production showed a modest rebound, while German ZEW signalled weaker current conditions but improved expectations. With little fresh data today, attention turns to today's Final CPI Y/Y figures, and President Lagarde’s speech tonight. Additionally, Thursday’s flash PMIs and any ECB commentary that could alter the current range.
GBP
AUD/GBP is broadly flat. Sterling has pushed higher in recent sessions, buoyed by resilient wage prints and firm labour-market indicators, yet gains remain capped by fiscal and policy uncertainty. UK equities were mixed and the market is braced for today’s CPI release, which along with this week’s BoE meeting and rate decision will be the key driver for near-term GBP moves. For now, sterling is trading within the recent ranges as investors weigh incoming UK data against broader global risk sentiment.
NZD
AUD/NZD is marginally up. The kiwi remains under pressure from an RBNZ that has adopted a dovish stance following its August easing, keeping the cross elevated. Local markets are quiet today; the key release will be Thursday’s Q2 GDP, forecast at -0.3% compared to the previous 0.8%, which is expected to confirm a slowing growth trajectory and could drive the next round of volatility in NZD.