USD Recedes as Fed Cuts by 25bps
AUD
The Aussie Dollar opens higher across the majors, as the RBA’s hawkish stance on interest rates prompted a recovery on previous losses. Trump's return to the White House has also upped market expectations of a faster, and larger, stimulus rollout in China which has supported the AUD. Looking at equities, the ASX closed +0.3% while in Asia, the Shenzhen closed +3.0%, Hang Seng +2.0% and the Nikkei slid -0.3%. Commodity prices were also higher, with key performers being Nat Gas +2.4%, Copper +4.3% and Cotton +2.0%. Yesterday, no economic data in Australia was released, although RBA Governor Bullock spoke, stating that it was “premature to assess the impact of the US election” on the Australian economy. China had their Trade Balance data released with a record high on exports, assisting in the strengthening of the Aussie Dollar. No major economic data will be released today, although Chinese quarterly inflation data will be released on Saturday.
USD
The AUDUSD opens at 0.6672, up over 1.7% as traders reassessed the possibility of Trump implementing his tariffs, which originally strengthened the US Dollar. Wall Street also closed higher, with Nasdaq +1.5%, S&P500 +0.7% and Dow Jones flat. Last night saw American Unemployment Claims released as expected at 221k for the week, but the key event was the US Federal Reserve's interest rate decision. They cut interest rates by 0.25% to 4.75% as expected, with Fed Reserve Chair Jerome Powell stating that ‘one or two bad months on inflation’ would not change their monetary policy. The Fed is now expected to also cut interest rates next month. Overnight we will see Preliminary UoM Consumer Sentiment and Inflation Expectations, which are indicators of US economic strength.
EUR
The AUDEUR opens at 0.6179, up 1.0% based off the strengthening of the Aussie Dollar thanks to the RBA’s commentary and Chinese stimulus expectations. European equities closed higher, with DAX +1.7% and CAC +0.8%. Yesterday saw German and French economic data released weaker than expected, highlighting some weakness in the major European currencies. Today, the French Trade Balance will be released at 6pm, and there won’t be any major economic data released next week.
GBP
The AUDGBP opens at 0.5128, up 0.8% mainly due to the Aussie Dollar strength through the RBA’s commentary and Chinese economic stimulus expectations. The FTSE retraced slightly, closing down -0.3%. Last night saw the Bank of England’s interest rate decision, where they cut interest rates by 25bps to 4.75% as expected. BoE’s Governor Bailey mentioned that disinflation was happening faster than expected, which increases expectations for future interest rate cuts. No economic data will be released from Britain until Tuesday, with key employment data released.
NZD
The AUDNZD opens at 1.1078 as the Aussie Dollar strengthens off increasing expectations of a faster, and larger, stimulus rollout from China in response to Trump's proposed tariffs. There was no economic data released yesterday, with RBNZ Governor Orr speaking but no relevant news on monetary policy. Monday will have Inflation Expectations q/q.