The Australian dollar is experiencing sustained pressure, remaining below $0.650 and nearing two-month lows. This trend is influenced by increasing expectations of an imminent rate cut by the Reserve Bank of Australia. Recent data has revealed an unexpected rise in the unemployment rate, reaching nearly a four-year high in September. Consequently, market participants are now pricing in a 70% likelihood of a 25 basis point reduction, a significant increase from the approximately 40% probability cited just last week.
The focus now shifts to upcoming economic indicators that could provide insight into the central bank's potential actions in November. This includes flash PMI figures set to be released this week and the crucial Q3 Consumer Price Index report expected next week. However, the Australian dollar might find some support following a strategic breakthrough between US President Donald Trump and Australian Prime Minister Anthony Albanese. The two leaders signed a critical minerals agreement intended to decrease dependence on China and potentially inject billions into local mining ventures.
Investors are also closely observing US-China trade relations ahead of the anticipated meeting between President Trump and President Xi in South Korea.
