AUD Falters From Loosening Labour Market
AUD
The Aussie Dollar opens lower against the majors, drifting down to 0.7009 against the US Dollar and easing against the Euro and Pound. A surging US Dollar and softening local manufacturing data weighed on the Aussie. However, sharp gains in crude oil and widespread expectations (~90% chance) that the RBA will raise interest rates next week prevented deeper losses. The local ASX 200 fell -0.7%, dragged down by materials and real estate stocks. Asian markets were mixed (Nikkei +0.8%, KOSPI +0.9%, Hang Seng -0.3%, Shenzhen -1.7%). Domestic data is quiet for the rest of the week. All focus shifts to Tuesday, September 29 at 2:30 PM AEST for the RBA rate decision, where all four major banks expect a 0.25% hike to 4.60%.
USD
AUD/USD opens lower at 0.7009 as the US Dollar Index pushed toward three-month highs. Hawkish comments from several Federal Reserve officials reinforced expectations that US interest rates will remain higher for longer, driving US Treasury yields up and boosting the Greenback. Wall Street closed lower overnight following the jump in bond yields, with major US indices taking a step back after recent gains. Global risk sentiment and oil market developments around the Strait of Hormuz will drive price action ahead of the upcoming Trump-Xi summit and the late-October Fed meeting.
EUR
AUD/EUR opens softer at 0.6164 (down from 0.6185 yesterday). The drop was driven primarily by broader weakness in the Australian Dollar, while European markets digested steady economic activity data despite high regional energy costs. European equity markets slipped into the close, with Germany’s DAX down -0.6% and France’s CAC falling -0.5%. Eurozone consumer confidence and money supply figures release tonight, alongside scheduled comments from ECB officials. The European Central Bank's next policy meeting is not until 28-29 October.
GBP
AUD/GBP opens slightly lower at 0.5306 (holding just above the 0.5300 handle). The pair remained largely bound in a tight range as both the Australian Dollar and the British Pound faced competing headwinds, balancing out significant overnight movements. UK shares posted minor losses, with the FTSE 100 closing down -0.2%. UK Consumer Confidence data releases tonight, followed by a speech from Bank of England Governor Andrew Bailey on Friday evening. The market will be watching for any fresh signal ahead of the Bank's next rate decision on 5 November, where the Bank Rate currently sits at 3.75%.
NZD
AUD/NZD opens slightly higher around 1.2405 (up from 1.2402). The Aussie continues to hold a solid premium over the Kiwi dollar due to central bank policy divergence; the RBA is actively leaning toward a rate hike next week, while the RBNZ remains on a more neutral path. Regional Pacific markets traded cautiously, following the softer tone set by Wall Street overnight. With no major domestic releases scheduled in New Zealand, the Kiwi will take its cues from global market sentiment and the fallout from next Tuesday's RBA policy decision; the RBNZ's next OCR review is scheduled for 28 October.