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Equity markets had a subdued performance, with the U.S. S&P 500 declining by 0.6%. In Europe, the Euro Stoxx 50 and FTSE 100 indices ended the day lower by 0.5% and 0.2%. Meanwhile, in bond markets, the yield on the U.S. 10-year Treasury rose by 1 bps from yesterday, reaching 4.41%.
Early this morning, FOMC member Lisa Cook suggested that the Fed should gradually lower interest rates over time, with the timing depending on economic data. Meanwhile, Fed Governor Michelle Bowman expressed a preference for a cautious approach to rate cuts, citing slower progress in reducing inflation.
USD is broadly stronger overnight.
AUD/USD pair took a hit overnight, now hovering just shy of 0.65. Today’s forecast: uneventful, given the lack of significant Australian economic releases. Keep an eye out for RBA Governor Michele Bullock’s address at the Women in Payments Conference this evening (7pm Sydney time).
AUD/GBP pair took a beating overnight, now flirting with the 0.5130 level. Despite stronger-than-anticipated UK CPI data, the GBP/USD only enjoyed a fleeting boost. October’s headline, core, and services CPIs all surpassed expectations. Consequently, financial markets have further postponed pricing for Bank of England rate cuts, with the next 25bp reduction not fully factored in until March 2025.
AUD/JPY retreated below the 101 mark, while USD/JPY continued its ascent, now approaching 155.40. Expect more verbal interventions from Japanese officials as USD/JPY climbs. However, without concrete action like direct market intervention or a BoJ rate hike, these warnings will likely have minimal and short-lived effects on USD/JPY.
Looking ahead, RBA Governor Bullock is scheduled to speak tonight. The economic calendar features mostly second-tier data, including U.S. initial jobless claims, the Philly Fed business survey, and existing home sales.
Mid-market rates.
| Currency Pair | Mid-market rate |
| AUD/USD | 0.6503 |
| AUD/NZD | 1.1069 |
| AUD/JPY | 101.08 |
| AUD/CNH | 4.7163 |
| AUD/EUR | 0.6168 |
| AUD/GBP | 0.5141 |
| AUD/HKD | 5.0609 |
Chart of the day
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