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Equity markets experienced volatility amid heightened geopolitical risks and market await the financial results from chipmaker and AI firm Nvidia. The conflict between Russia and Ukraine intensified as Ukraine began deploying longer-range U.S. supplied missiles into Russian territory. Despite initial weakness, the S&P 500 managed a 0.2% gain. In contrast, European markets saw declines, with the Euro Stoxx 50 and FTSE 100 closing down 0.8% and 0.1%, respectively. Bond yields dipped slightly, with the U.S. 10-year Treasury yield falling 4 bps to 4.38%.
U.S. housing starts dropped by 3.1% in October, marking their slowest pace in 3 months, as hurricanes Helene & Milton further disrupted an already slowing construction sector. Building permits were less affected by the weather, fell 0.6% m/m.
Safe-haven demand initially boosted the USD and JPY, but those gains have since faded. The DXY index remains unchanged for the day.
AUDUSD briefly dipped below 0.6482 but has since rebounded, climbing to 0.6530. It was a turbulent overnight session, largely influenced by geopolitical tensions, which caused fluctuations in risk-sensitive currencies. Looking ahead, the AUDUSD faces a key Fibonacci resistance level at 0.6580. However, there’s significant ground to cover before reaching that point, as the pair remains under pressure from expectations of lower interest rates and a risk-averse market environment. On the downside, support holds at 0.6455, just above recent lows.
AUDNZD is trading steady around 1.1050, similar to yesterday’s levels. The RBA meeting minutes released yesterday included cautious language, hinting that the board may be open to easing policy. However, any rate cuts in early 2025 would likely depend on a decline in trimmed mean inflation. They still forecast the RBA’s first rate cut in February 2025 but note that recent economic data had increased the likelihood of a later start to the easing cycle. The tone of yesterday’s minutes, however, slightly reduces that risk.
Mid-market rates.
| Currency Pair | Mid-market rate |
| AUD/USD | 0.6530 |
| AUD/NZD | 1.1045 |
| AUD/JPY | 101.01 |
| AUD/CNH | 4.728 |
| AUD/EUR | 0.6164 |
| AUD/GBP | 0.5151 |
| AUD/HKD | 5.0824 |
Chart of the day
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