AUD Under Pressure, Local Data Weakens & US Dollar Remains Weak
The Australian dollar (AUD) weakened in today's Asian session, with the AUD/USD pair approaching the 0.6600 level. This pressure came after the release of Australian economic data showing signs of weakness. Although the AiG industrial index rose to -13.2 in September, this figure still reflects a contraction. Meanwhile, the manufacturing PMI also fell to 51.4, indicating slowing growth.
The Reserve Bank of Australia (RBA) decided to hold interest rates at 3.6% at its latest meeting. RBA Governor Michele Bullock stated that inflation was slightly higher than expected, but not yet concerning. She also stated that the central bank would not provide future guidance until November's economic data was released.
Pressure on the AUD was somewhat mitigated by the sluggish US dollar, following disappointing US employment data. The market now rates a nearly 97% chance of a Fed rate cut in October, with a 76% chance of another cut in December, according to the CME FedWatch Tool.
The situation is further complicated by the threat of a US government shutdown, which could potentially leave 750,000 federal employees on leave. If a shutdown occurs, crucial data such as the monthly jobs report will also be delayed, further increasing uncertainty about the direction of US monetary policy. This could keep AUD/USD volatility high in the coming days.
Source: Newsmaker.id
