USD climbs after Powell pushes back on further cuts
The US Federal Reserve cut interest rates overnight as expected, but it was Fed Chair Jerome Powell’s comments that stole the spotlight. Powell warned that a December rate cut is “far from” a foregone conclusion, prompting markets to scale back expectations for further easing.
The greenback surged to a two-week high on the back of the remarks, reversing earlier moves across currency markets.
The AUD/USD gave up gains to end the session down 0.2%, while the NZD/USD slipped 0.3%. The USD/SGD also fell 0.3%, and USD/CNH was little changed.
Attention now turns to the APEC summit in South Korea, where US President Donald Trump and Chinese President Xi are expected to meet on the sidelines.
AUD jumps as inflation overshoots RBA forecasts
Australia’s Q3 inflation surprised to the upside, with headline CPI rising 1.3% quarter-on-quarter and the trimmed mean up 1.0% — both well above consensus and the RBA’s own projections.
The upside surprise was driven by higher electricity prices and continued strength in market services and housing.
This result is especially significant in light of recent comments from RBA Governor Michele Bullock, who said a trimmed mean CPI of around 0.9% or higher would represent a “material miss.” The 1.0% print clearly meets that threshold, reducing the likelihood of a near-term rate cut.
The Aussie dollar initially surged to a two-week high against the greenback before retreating after the Fed’s hawkish tone. The Aussie was higher in most other markets, nearing three-year highs versus the kiwi and saw the AUD/JPY back near 100.00.
Bank of Japan decision up next
The US dollar also found support from improving labour market data.
ADP’s new weekly jobs report showed a four-week average of 14,250 new positions, up 57,000 from a month ago, signalling a rebound in hiring momentum.
Next up is the Bank of Japan’s policy decision – no change is expected.
USD stronger after Fed
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