The Australian dollar traded around $0.68 on Monday, following a 1.6% decline last week, primarily influenced by the strength of the US dollar. This shift was driven by robust economic data from the US which has tempered expectations for interest rate cuts by the Federal Reserve. Recent figures revealed that the US economy added significantly more jobs than anticipated in Stember, leading markets to discount the prospect of a 50 basis point rate cut in November.
Additionally, heightened tensions in the Middle East have further dampened risk appetite, placing additional pressure on risk-sensitive currencies such as the Australian dollar. Investors are also closely monitoring the outlook for the Reserve Bank of Australia’s monetary policy, especially as expectations suggest it may begin to reduce rates much later than its peers. Currently, the market is estimating an over 70% chance for an RBA rate cut in December, yet this may not come into play until early 2025, dendent on the trajectory of core inflation.
On Monday, October 7, the AUD/USD decreased 0.0029 or 0.43% to 0.6764, down from 0.6793 in the previous session. Looking ahead, analysts anticipate that the Australian Dollar is likely to stabilize at $0.68 by the end of this quarter, with projections indicating it could trend down to $0.65 within the next 12 months.