The Australian dollar struggles as a dovish RBA shift and a US tech-sector rout drive risk-off sentiment, pushing AUD/USD toward the 0.69-handle.
The RBA's surprise 6-3 dovish vote split, removal of the willingness to hike further and NAIRU raised to 4.75% signal the hiking cycle may be over, while a Democrat Congress-driven AI equity rout (NASDAQ losing over US$3.5 trillion by Friday) triggered AUD's risk-off selling into the 0.68s. A hot US CPI would add Fed tightening pressure.
AUD's traditional risk-off qualities came into play during the AI/equity rout, and AUD/NZD has dropped almost 2 cents over the week (-1%) to 1.2338, showing the Aussie underperforming even against its trans-Tasman peer.
With the RBA signalling it may be done hiking while other central banks are still playing catch-up, the AUD is underperforming: AUD/EUR is down 1.3% and trading near 0.6179.
The risk-off unwind of AI and equity positions hit the risk-sensitive Aussie hardest against its G10 peers, with AUD/JPY down 1.3% and trading just above 109.0 on Monday afternoon.
DXY fell almost 0.6% to a low of 101.09 on the Democrat midterm sweep, but October nonfarm payrolls beat at 165k vs 70k expected with unemployment down to 4.1%, keeping an 80%-priced December hike alive and supporting the dollar into this week's CPI.
The Australian dollar faces downward pressure after a dovish 6-3 RBA vote split and the removal of language regarding further rate hikes. Concurrently, a sharp equity sell-off triggered by US midterm election results and AI-sector concerns has pushed the currency lower against G10 peers, including a 1.3% decline against both the Euro and Japanese Yen.
A dovish RBA hike, an 18% plunge in crude oil and a Democrat-sweep-triggered AI and equity sell-off all weighed on the currency, pushing AUD/USD deep into the 0.68s.
The US CPI and PPI releases are the big tests: softer inflation could give the Aussie breathing room, while a hot print would keep Fed tightening risks alive and add pressure.
It has dropped almost 2 cents over the week, about -1%, to 1.2338 as the Australian dollar sold off against its G10 peers.
AUD/EUR is down 1.3% and trading near 0.6179 as the Aussie underperforms against G10 peers.
AUD/JPY has fallen 1.3% over the week and is trading just above 109.0 on Monday afternoon.
The dollar fell almost 0.6% after the Democrats won Congress, but a strong October jobs report (165k vs 70k expected) kept expectations of a December Fed hike around 80%, supporting the dollar.