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The AUD/USD pair experienced a downturn, now hovering around 0.6470, as the USD gained strength. Australia’s Q3 economic data release is imminent, with GDP figures due tomorrow. Economists predict a modest 0.4% quarterly growth, though this forecast may be revised. A significant shift in AUD/USD is unlikely unless GDP data is exceptionally weak. Further USD strengthening could push the pair to test last week’s 0.6434 low.
The USD continued its ascent, buoyed by rising Treasury yields, and is trading near 106.5 points. November’s ISM manufacturing index surpassed expectations at 48.4 points, though still indicating contraction. FOMC member Bostic remains open-minded about December’s meeting, while markets are pricing in a 60% chance of a 25bp rate cut next week. Upcoming events include FOMC Chair Williams’ speech and the JOLTS job openings report.
AUD/EUR is trading around 0.6170, slightly up from yesterday. Political tensions in France, with a looming no-confidence vote, are widening the French-German bond yield spread to 87bps. This uncertainty could pressure the EUR, potentially supporting AUD/EUR. The AUD/NZD pair eased to just below 1.10. ASB analysts now anticipate a larger-than-usual 50bp rate cut by the RBNZ in February, followed by two 25bp cuts in April and May. This aggressive easing cycle has narrowed the AU-NZ bond yield gap, reducing headwinds for AUD/NZD. However, if the RBA begins easing earlier than expected, it could exert downward pressure on the pair.
Lastly, AUD/CNH dipped to around 4.7150, while USD/CNH approached 7.28. The PBOC is expected to set a stronger-than-anticipated CNY fixing to bolster the currency. Expectations of further monetary easing in China are weighing on the CNH, with PBOC Governor Pan hinting at increased countercyclical measures next year. These expectations have pushed Chinese 10-year government bond yields to record lows, just under 2%.
Mid-market rates.
| Currency Pair | Mid-market rate |
| AUD/USD | 0.6475 |
| AUD/NZD | 1.1001 |
| AUD/JPY | 96.82 |
| AUD/CNH | 4.7176 |
| AUD/EUR | 0.6168 |
| AUD/GBP | 0.5117 |
| AUD/HKD | 5.0382 |
Chart of the day
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