Market Update 11/12/2024

– AUD/USD hovers near 0.6380, just above the year-to-date low of 0.6350, after the RBA expressed growing confidence in inflation moving toward its target. Markets now see a 60% chance of a 25bp rate cut in mid-February, up from under 50% before yesterday’s meeting. Tomorrow’s labour force report could further influence expectations, particularly if unemployment rises. Deputy Governor Hauser speaks tonight, with focus on potential easing signals. US CPI later today could also lift AUD/USD if the core reading is 0.3%/month or less.

– USD edged higher in a quiet session, with tomorrow’s US CPI being pivotal. A 0.3% core increase may nudge USD closer to 105.1 (50% Fibonacci), while 0.4% or more could push it toward its 2024 high of 108.1 as Fed rate cut odds shrink.

– AUD/CAD is heavy at 0.90 post-RBA. Tomorrow’s BoC decision, where markets expect a 50bp cut, may boost AUD/CAD slightly. A smaller 25bp cut could break support at 0.8975. Population decline in 2025-2026, referenced in the BoC’s outlook, could weigh on GDP.

– AUD/CNH has been volatile. Gains from hints of Chinese macro-policy support reversed as the RBA signaled potential rate cuts. Markets remain cautious about strong Chinese stimulus amid past disappointments.