Fed cut likely after US CPI
The Australian dollar has led markets higher following Friday’s US inflation report with the market now looking for the Federal Reserve to cut interest rates by 25 basis points when it meets on Thursday morning (APAC time).
The headline annual US inflation number was reported at 3.0%, below forecasts for 3.1%, while the core annual number was also 3.0% and similarly below forecasts for 3.1%.
Financial markets now see a 97% chance of a rate cut this week (Source: Bloomberg).
Trump-Xi meeting in focus
The Aussie was also lifted this morning ahead of this week’s much-anticipated meeting between US President Donald Trump and Chinese President Xi Jinping.
The AUD/USD climbed to two-week highs with the NZD/USD also stronger.
Over the weekend, sentiment was boosted as after US Treasury secretary Scott Bessent said the framework was in place for a “substantial” trade deal.
President Trump is scheduled to meet Chinese President Xi on the sidelines of the APEC summit on Thursday.
Fed, BoJ, BoC the highlights this wee
Looking forward, it’s a pivotal week on the policy front, with the US, Canada, Japan and the eurozone all set to announce rate decisions.
Crucially, we anticipate the Fed will pair the cut with cautious messaging, emphasizing that nothing is guaranteed for the December meeting- especially in light of the ongoing data blackout.
In Australia, all eyes are on the September-quarter inflation number, due on Wednesday, as key ahead of the Reserve Bank of Australia decision next week.
Aussie jumps to two-week highs
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 27 – 31 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.
