AUD Falls on Eve of Expected RBA Hike
AUD
The Aussie Dollar drops against the majors ahead of the RBA’s expected rate hike today and the U.S. midterm elections tonight. Asian equities finished the day mixed, with the ASX closing down 0.6% and the SHANGHAI COMP finishing up 1.1%. Australian house prices fell again across the capital cities in October and are down 8.1% in the seven months from the peak in March. Prices have fallen the most in the biggest cities of Sydney and Melbourne, but are dropping quickly too in some of the smaller markets. Building Approvals m/m did lift to 5.1%, expected at 2.0% from -5.2%. The RBA hands down its decision today, along with updated forecasts for inflation and the economy. Markets are currently pricing in an 80% chance of a 25-basis point hike to 4.85%. .Despite the RBA’s recent hawkish tone and its last hike on September 29, some economists argue that softer economic and survey data gives the Board room to pause and assess whether this year’s 100bp of hikes is enough.
USD
The AUDUSD has opened the morning lower at 0.6997, with the pair dropping under the 0.70 barrier overnight. Wall Street was mixed into the close, with the DOW JONES up 0.6%, S&P 500 down 0.1% and the NASDAQ down 0.6%. Last night, the U.S. ISM Manufacturing index for October climbed to 55.5, ahead of the 54.5 expected, with New Orders and Employment beating forecasts and Prices Paid coming in below them. Looking ahead, tonight’s US job openings data for September will help shape views on the labour market before Friday’s October employment report, with openings expected to rise by 121k to 7.1 million, partly reversing last month’s fall. The US midterm elections are also held overnight, with results due Wednesday morning Sydney time deciding control of Congress. Republicans currently hold both the House and the Senate, but polls point to the Democrats likely winning the House and possibly the Senate. The result could shape the fiscal outlook and how much of its agenda the Trump administration can deliver in 2027 and 2028.
EUR
The AUDEUR opened the morning lower at 0.6253, with the pair dropping half a cent overnight to a 2-week low. European equities were green into the close, with the DAX up 0.6% and the CAC up 1.0%. European Manufacturing PMIs were released last night, with a mild lift to 52.7, expected to remain at 52.4. Tonight will see the French Gov Budget Balance set to be released, usually a mild data point, however with the riots currently occurring, it could see an amplified effect on the Euro.
GBP
The AUDGBP opens lower at 0.5221, trading between 0.5215 and 0.5255 over the past 24 hours as markets price in expected interest rate hikes from Australia and the UK. Markets are pricing in a 95%+ chance for the Bank of England to increase interest rates to 4.00%. This would be the first rate hike in 2026 from the BoE. On equities, the FTSE closed +0.3%. No major economic data events out of the UK yesterday, with the next major economic piece being Thursday night’s interest rate decision.
NZD
The AUDNZD opens flat at 1.2458, trading between 1.2436 and 1.2522 over the past 24 hours as there was minimal economic data out of New Zealand. This morning had Building Consents m/m release at -7.9%, down from +5.3% last month. No more major economic news out of New Zealand until Wednesday’s employment data, ahead of Saturday’s Parliamentary Elections.