Global overview
The US dollar continued to weaken with markets now indicating the Federal Reserve is unlikely to hike again in the near term. The AUD/USD hit one-month highs. Tonight, all eyes are on the US non-farm payrolls report.
Aussie hits one-month highs
The Australian dollar was sharply higher over the last 24 hours with the AUD/USD hitting the highest level since 29 September as US bond yields plunged.
US yields fell after Federal Reserve chair Jerome Powell said this week that risks were now “balanced” between doing too little versus doing too much. Financial markets now no longer expect the Fed to hike rates again with no more rates hikes priced in.
The positivity saw US sharemarkets jump with the S&P 500 up 1.9% and the Nasdaq up 1.7% overnight.
The difference between US and Australian two-year bond yields has fallen from a 120bp advantage to the USD to just 60bps over the last month, boosting the AUD/USD.
The AUD/USD gained 0.6%.
USD weakness drives markets
In other markets, a weaker US dollar drove activity.
The NZD/USD was also much stronger as it gained 0.9% to reach two-week highs. The USD/SGD fell 0.3% while the USD/CNH lost 0.2%.
In the majors, the USD/JPY fell 0.3% while the EUR/USD gained 0.5%.
The GBP/USD gained 0.5% after the Bank of England kept interest rates on hold with markets increasingly believing the Bank of England is also at the end of its tightening cycle.
US jobs due
Tonight’s focus is on the US non-farm employment report due at 11.30pm AEDT.
According to Refinitiv, the market is looking for 180k new jobs with the unemployment rate tipped to remain steady at 3.8%.
With bond yields and the US dollar easing, the risk tonight is for a miss from US jobs. A weaker than expected reading might drive further losses in the USD.
Aussie hits one-month highs
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 30 October – 4 November
All times AEDT
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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.
