The U.S. dollar weakened Tuesday as investors braced for a potential U.S. government shutdown that could delay key jobs data this week, while the Australian dollar rose after the central bank adopted a cautious stance on inflation.
اضافة اعلان
Australian Dollar: Rose 0.49% to 0.66075 USD after the Reserve Bank of Australia kept interest rates unchanged as expected. The bank noted that inflation may be higher than anticipated in Q3 and that economic outlooks remain uncertain. Earlier in 2025, the bank cut rates in February, May, and August.
Market Commentary: Carol Kong, FX strategist at Commonwealth Bank, said the RBA statement signaled caution due to economic data volatility and a recent inflation surprise. She noted that a 25-basis point rate cut in November remains possible but will depend on the upcoming Q3 CPI reading.
Dollar Movements: The U.S. dollar index, which tracks the greenback against a basket of currencies, fell to 97.928 points, down 9.7% year-to-date. The euro slipped slightly to 1.172 USD, and the pound stood at 1.3436 USD. The Japanese yen weakened slightly to 148.72 JPY/USD as investors awaited insights from the Bank of Japan’s September policy meeting.
Treasury Yields: Yields on 10-year U.S. Treasuries edged to 4.142%, down 4.6 basis points Monday and 8.3 points for the month. Analysts noted that a short-term shutdown may have limited GDP impact, while a prolonged shutdown could weaken growth and push the Federal Reserve toward monetary easing.
Investor Focus: Attention is on the looming government shutdown as funding expires at midnight Tuesday unless Congress agrees on a temporary spending measure. A delay in the nonfarm payrolls report—scheduled for Friday—would deprive the Fed of a key labor market indicator for policy decisions.
Market Implications: The Australian dollar has gained over 6% since the start of 2025, benefiting from a weaker U.S. dollar and strong risk appetite. U.S. policy expectations suggest 42 basis points in cuts by December and a total of 104 basis points by end-2026, slightly lower than mid-September projections.
In summary, the U.S. dollar faces near-term pressure due to government funding uncertainty and expectations of Fed rate cuts, while the Australian dollar gains from cautious central bank commentary and favorable risk sentiment.
