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AUD/USD experienced a slight decline overnight, now trading around 0.6570. Today’s releases of CBA’s household spending indicator, Westpac consumer sentiment, and NAB business survey are unlikely to significantly impact AUD/USD. More influential will be tomorrow’s wages data and Thursday’s labour force figures. Following President Trump’s election victory, AUD/USD may continue to soften as long-term investors shift their portfolios towards USD assets. In the coming weeks, AUD/USD could test the 0.6490 level (23.6% Fibonacci retracement).
USD strengthened overnight, trading near 105.5 points during quiet US holiday trading. Trump’s growth-oriented policies are expected to attract capital, boosting USD. While short-term money has already moved, long-term investors will take time to adjust their portfolios, suggesting further USD upside potential. However, it’s worth noting that USD gains during Trump’s first term were temporary. This week’s key data point is Thursday’s US October CPI, with a modest 0.2% monthly increase in core inflation expected, keeping US rate cut possibilities open.
AUD/GBP saw a slight increase, now trading near 0.5110. UK labour market data for September and October (due at 6pm Sydney time) is expected to show continued tightness. Wage growth is gradually cooling from high levels. Strong labour market data could further reduce expectations of a December BoE rate cut, potentially putting slight downward pressure on AUD/GBP. Support for AUD/GBP is seen at 0.5085 (23.6% Fibonacci level).
AUD/EUR also edged higher, supported by falling European government bond yields, with German yields down 4-5bp across the curve. Germany faces political uncertainty due to the collapse of the ruling coalition over budget disagreements, with potential elections in early 2025. Europe faces multiple challenges, and Trump’s US election win has increased concerns about US-Europe trade and security relations, negatively impacting EUR/USD but supporting AUD/EUR.
USD/JPY continued to rise, now trading near 153.70. Shigeru Ishiba was re-elected as Prime Minister following the Liberal Democratic Party’s loss of majority in October. USD/JPY could rise further if Republicans gain House control and risk sentiment remains positive. However, potential FX intervention by Japan’s Ministry of Finance may limit USD/JPY’s upside. Last week, a top Japanese currency official indicated readiness to act against excessive FX movements.
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Mid-market rates.
| Currency Pair | Mid-market rate |
| AUD/USD | 0.6574 |
| AUD/NZD | 1.1025 |
| AUD/JPY | 101.06 |
| AUD/CNH | 4.7513 |
| AUD/EUR | 0.6169 |
| AUD/GBP | 0.5109 |
| AUD/HKD | 5.1106 |
Chart of the day
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