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– AUD/USD hit a year-to-date low of 0.6337 overnight before recovering slightly to just under 0.6370, pressured by reports that China may let CNH weaken next year to counter Trump’s proposed tariffs. RBA Deputy Governor Andrew Hauser noted uncertainty about these tariffs’ impact on Australia but reassured the RBA is ready to act if needed.
Today’s November labour force report (11:30 am Sydney time) is key. A 35k job gain and a rise in unemployment to 4.2% are expected, reinforcing a likely February RBA rate cut. Market pricing for a 25bp cut is now 69%, up from 30% last week.
– USD briefly eased below 106.4 after CPI matched expectations with a 0.3%/month rise but regained ground. FOMC rate cut odds next week rose to 95%. November PPI and jobless claims later today may refine inflation expectations.
– AUD/EUR rose above 0.6070 ahead of the ECB’s expected 25bp rate cut today. Post-meeting communication may highlight Eurozone risks, but AUD/EUR could rise modestly as easing is already priced in.
– AUD/CAD slipped 0.5% after the BoC cut rates by 50bp to 3.25%. Governor Tiff Macklem signaled a more gradual approach going forward. Lower immigration targets are expected to weaken GDP growth but have limited inflation impact.
Mid-market rates.
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Chart of the day
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