AUD/USD gains 0.75% to 0.6915 as broad US Dollar weakness offsets strong US labor data and expectations for a December Fed rate hike, while WTI crude oil drops over 3% on easing geopolitical tensions.
AUD/USD rebounds sharply, gaining 0.75% to around 0.6915 on Monday as broad US Dollar weakness dominates, with DXY down 0.44% near 101.85. Mixed Chinese October data (CPI 0.7% YoY, below the 0.8% expected) argues against the Aussie, but USD softness is currently the main driver. Tuesday's US CPI could still reverse the move if it strengthens December hike expectations.
The US Dollar is broadly weaker on Monday, with DXY falling 0.44% to around 101.85, losing 0.59% against the AUD and 0.74% against the CAD. This happens despite nearly 80% market odds of a 25 bps Fed hike in December and strong October jobs data (NFP 165K vs 65K expected), making the decline notable but potentially fragile ahead of Tuesday's CPI.
WTI fell more than 3% on Monday to around $86.85 as geopolitical risks eased: US President Donald Trump played down the likelihood of renewed strikes against Iran and Qatar's Prime Minister is visiting Washington for talks aimed at ending the conflict, reducing supply-disruption fears in energy markets.
The Australian Dollar climbed to 0.6915 on Monday, bolstered by a 0.44% decline in the US Dollar Index to 101.85. Despite mixed Chinese CPI data and an 80% market probability of a December Fed rate hike, the Aussie maintained bullish momentum as investors await critical US inflation reports on Tuesday and Friday.
It is gaining mainly because the US Dollar is broadly weaker, with AUD/USD up 0.75% to around 0.6915, despite mixed Chinese economic data.
Stronger-than-expected US inflation data on Tuesday or Friday could reinforce expectations of a December Fed rate hike and support a US Dollar rebound, potentially pushing AUD/USD lower.
The decline is broad-based across major currencies on Monday, suggesting sentiment is currently outweighing the nearly 80% priced odds of a December Fed rate hike.
Tuesday's US Consumer Price Index and Friday's Producer Price Index releases; stronger-than-expected inflation could reinforce December rate hike expectations and support a Dollar rebound.
It dropped more than 3% to around $86.85 because eased tensions between the US and Iran, with diplomatic talks underway, reduced concerns about disruptions to energy supplies.