USD gains as government shutdown looms
The Australian dollar ended last week at a three-week low, setting the stage for a pivotal week in global markets.
The spotlight is on Friday’s US jobs report, though its release is uncertain due to a potential US government shutdown set to begin at midnight on 30 September (US EDT), or 2:00pm Wednesday AEST. Republicans are pushing a short-term funding bill, while Democrats are seeking to reverse recent Medicaid cuts and extend tax credits.
Despite the looming shutdown and new pharmaceutical tariffs, US equities rose on Friday. Core PCE inflation met expectations and consumer spending accelerated.
The US dollar posted its second consecutive weekly gain, rising 0.5% for the week – its first two-week winning streak since mid-July.
The AUD/USD fell 0.8% over the week and is now down 2.5% from its mid-September highs.
The USD/SGD rose 0.6%, pushing the Singapore dollar to its weakest level since early August and offering a potential opportunity for USD sellers.
The USD/CNH gained 0.3%, rebounding from one-year lows seen earlier this month.
Kiwi hits five-month low despite confidence bounce
The New Zealand dollar was the hardest hit in the recent sell-off with NZD/USD down 3.9% from its mid-month highs.
Consumer confidence in New Zealand rose to 94.6 in September from 92 in August, a 2.8% monthly increase from a 10-month low. Inflation expectations held steady at 4.8%. The report noted that sentiment following weak Q2 GDP data was more downbeat, but likely marked “peak pessimism.”
The NZD/USD is trading near a five-month low against the US dollar but remains 5% above its April trough of 0.5486. The next resistance levels are the 21-day EMA at 0.5877 and the 50-day EMA at 0.5906.
RBA decision in focus
The Reserve Bank of Australia’s policy meeting on Tuesday is the key event in the Asia-Pacific region. Markets expect the RBA to hold the cash rate steady at 3.6%. Any shift in tone or forward guidance could move AUD crosses, especially after recent volatility in building approvals, with August expected to show a 2.8% rise following July’s 8.2% drop.
A wave of manufacturing PMI data will provide a global growth check. China’s official manufacturing PMI is expected to come in at 49.6, up slightly from 49.4. Japan’s Tankan Large Manufacturing Index is forecast to rise to 14 from 13. Final PMI prints for Japan, France, Germany, the Eurozone, the UK and the US are due Wednesday. The US ISM Manufacturing Index, also out Wednesday, is expected to rise to 49.2 from 48.7, after last month’s contraction signal.
Labour market data will take centre stage later in the week. The ADP Employment Change on Wednesday is expected to show a gain of 48,000 jobs, down from 54,000 previously. Initial jobless claims follow on Thursday, while Friday’s Nonfarm Payrolls report is forecast to show a 43,000 increase in jobs, up from 22,000 last month. The unemployment rate is expected to remain steady at 4.3%. These figures will be pivotal for USD direction and Fed policy expectations.
Inflation data from Europe and Japan could also influence rate expectations. Germany’s preliminary CPI for September is expected to show a 0.1% monthly rise and a 2.2% annual increase. France’s CPI is forecast to rise 0.9% year-on-year. The Eurozone-wide CPI is due Wednesday.
Japan’s data docket includes preliminary industrial production for August, expected to fall 0.3%, and the August jobless rate, expected to tick up to 2.4% from 2.3%.
In the UK, property market trends remain in focus with September’s Nationwide House Prices due Wednesday, following a 0.1% monthly decline in August. In the US, the Conference Board’s Consumer Confidence Index is expected to dip to 95.8 from 97.4, offering another read on household sentiment.
USD gains for second week
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 29 September – 3 October
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*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
