Welcome to our daily market update, where we help keep you informed on the latest happenings in the world of FX.If you have any questions or would like anything further explained, please don’t hesitate to reach out to your account manager or email info@cafx.com
Equity markets pulled back slightly, with the S&P 500 falling 0.2% and the Nasdaq down 0.4%, while the Dow managed a small gain of 0.1%. In Europe, the Euro Stoxx 50 dropped 1.5% and the FTSE 100 declined by 1.2%. Meanwhile, the yield on the US 10-year Treasury increased by 2.8 bps to 3.74%. The market is still absorbing last week’s Fed rate cut, which has been supportive for risk assets as USD funding becomes cheaper. However, with equities already at high levels, there’s uncertainty about further upside potential.
Over the weekend, Fed’s Waller called the 50bp cut the right move to keep the economy strong, signalling a slightly dovish tone. He also suggested inflation might be on a lower path than expected, with core PCE possibly below target. Future rate cuts will be data-dependent, but he indicated that another 50bp cut could be on the table if the job market deteriorates. Next week brings September’s NFP data.
In U.S. politics, Trump stated it’s ‘too late’ for another debate after Harris expressed her willingness to participate in one on CNN in October. However, recent polls show Harris leading in two national surveys of registered voters, conducted by NBC and CBS/Ipsos. Could Trump’s decision to skip another debate impact voter sentiment, especially as Harris gains in the polls? Political uncertainty can influence market sentiment, particularly as election outcomes begin to affect expectations around policy changes, fiscal stimulus, and trade. With Harris’s rising poll numbers, markets may start factoring in potential shifts in economic strategy.
AUD/USD can lift above 0.6900 this week for the first time since February 2023 because the RBA is likely to be hawkish.
AUD/EUR and AUD/GBP will test resistance at 0.6150 and 0.5192 respectively, if risk sentiment remains healthy and equity markets continue to rise.
AUD/NZD can trade in a range around 1.0930, its 100‑day moving average.
AUD/JPY will extend last week’s gains towards resistance of 99.76 (50% fibbo) as risk sentiment further increases.
AUD/CAD can break through resistance at 0.9269 (100% fibbo) because we expect a hawkish RBA.
AUD/CNH can lift above resistance at 4.8401 (76.8% fibbo) if hopes of a soft landing in the US economy further increases risk appetite.
Mid-market rates.
| Currency Pair | Mid-market rate |
| AUD/USD | 0.6808 |
| AUD/NZD | 1.0921 |
| AUD/JPY | 98.15 |
| AUD/CNH | 4.7974 |
| AUD/EUR | 0.6102 |
| AUD/GBP | 0.5115 |
| AUD/HKD | 5.3048 |
Chart of the day
Disclaimer:
The market update provided by Corporate Alliance FX (CAFX) is for reference only and does not constitute a bid, levy, offer or invitation to offer for the financial product, the basis for any contract or commitment, a recommendation for the purchase or sale of any investment instruments, financial, legal, tax, investment advice, investment advice or other opinions. It will not be legally liable for any consequences or losses caused by the information or content involved.
Corporate Alliance Group Pty Ltd T/A Corporate Alliance FX (CAFX) (ABN 58 167 119 226, AFSL 523351) (i.e. CAFX), CAFX independently holds the Australian Financial Services licence no. 523351 (AFSL), so CAFX is regulated by the Australian Securities and Investment Commission (ASIC) and, and although ASIC is a strictly regulatory body, it does not endorse a specific financial product. ASIC’s regulation of CAFX applies to all services under the financial licence held by CAFX, including the issuance of foreign exchange settlement, foreign exchange payments, foreign exchange risk control, hedging, market making and providing financial advice.
