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Equity markets rose as the Federal Reserve’s recent rate cut strengthened hopes for a soft landing in the US economy. The S&P 500 increased by 0.3%, the Euro Stoxx 50 gained 0.3%, and the FTSE 100 rose by 0.4%. Meanwhile, the yield on the US 10-year Treasury remained steady at 3.74%.
Preliminary PMI data for September shows the US manufacturing index at 47.0 and the services index at 55.4, with the services PMI coming in slightly above expectations.
The USD remains weaker, struggling to recover after the Fed’s larger-than-expected rate cut and another round of generally dovish comments from Fed officials overnight. While their remarks mostly justified last week’s decision, along with weaker US PMI data it helped suppress US short-term interest rates and kept the USD DXY index near its recent lows.
AUDNZD has held steady since last Friday around 1.0930. Today’s focus is on the RBA interest rate decision, which might be uneventful, with no immediate changes to the cash rate. However, if the RBA maintains a hawkish stance, highlighting the need to stay alert to inflation risks and keeping future policy options open, then we might see the AUD rise against other currencies.
AUDJPY has risen slightly to around 98.60. Over the last seven sessions, the pair has moved within a range of 97.50 to 98.70. The recent trend suggests bullish momentum, and a break above the 98.6 resistance level could signal further gains ahead.
AUDGBP has returned to 0.5110. UK PMI data indicated a smaller decline than in the euro area, with the composite index dropping by less than a point to 52.9. This aligns with recent GDP data, reflecting a slowdown in growth after the recovery earlier in the year. UK short-term rates saw only a slight drop, while the 10-year yield rose by 2bps, in contrast to declines elsewhere. This provided support for GBP/USD, which recovered from a low of 1.3250 to 1.3350, gaining 0.2% since last week’s close.
AUDEUR rose by 1% nearing 0.6160. Eurozone PMI data for September came in weaker than expected, with the composite PMI dropping 2.1 points to 48.9, marking its first sub-50 reading in seven months. This decline was driven by Germany’s deepening manufacturing contraction and a slowdown in France’s services sector after the Olympics-related boost. The softer data led the market to anticipate further ECB easing this year, pushing rates down and weakening the euro. EURUSD fell to around 1.1080 before recovering to 1.1120, ending the day down 0.4% and making it the weakest among major currencies.
Mid-market rates.
| Currency Pair | Mid-market rate |
| AUD/USD | 0.6830 |
| AUD/NZD | 1.0901 |
| AUD/JPY | 98.01 |
| AUD/CNH | 4.8203 |
| AUD/EUR | 0.6147 |
| AUD/GBP | 0.5116 |
| AUD/HKD | 5.3195 |
Chart of the day
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