AUD – Australian dollar
The Australian dollar is slightly weaker again this morning when valued against the Greenback currently trading at US$0.6716 at time of writing. The AUDUSD pair attracts fresh sellers and drifts into negative territory for the fifth straight day on Wednesday. The Australian dollar (AUD) continues to be undermined by the disappointment over China’s stimulus update. China’s National Development and Reform Commission (NDRC) stated on Tuesday that the economy is facing more complex internal and external environments, and also fell short of announcing any new major stimulus plans. Yesterday, it was reported that China’s Finance Ministry is set to roll out a 2 trillion yuan fiscal stimulus package on October 12. The fiscal stimulus will be announced to support economic growth so that they can achieve a 5% Gross Domestic Product (GDP) target for the year.
Key Movers
The US dollar Index (DXY), which measures the value of the USD against a basket of six currencies, is gaining against almost all of its competitors as markets assess the Federal Open Market Committee’s (FOMC) September Meeting Minutes. The Minutes showed that Fed members agreed not to lock themselves into an aggressive easing path. The Minutes also indicated that future policy adjustments would depend on incoming data, while also noting that if the economy performs as anticipated, “it would likely be appropriate to gradually shift toward a more neutral policy stance.” As a result, market players dropped bets of a 50 bps cut in November, with the odds for a 25 bps currently standing at around 85%. Looking ahead this week, the market focus will be glued to the release of the US Consumer Price Index (CPI) and the Producer Price Index (PPI) on Thursday and Friday, respectively.
Global stocks advanced on Wednesday, along with US Treasury yields, as investors digested minutes from the Federal Reserve’s September meeting and awaited inflation data for clues on the central bank’s interest rate path. The Dow Jones Industrial Average (DJI) rose 346.47 points, or 0.82%, to 42,426.84. The S&P 500 (SPX) rose 25.84 points, or 0.45%, to 5,776.97 and the Nasdaq Composite (.IXIC) rose 57.66 points, or 0.32%, to 18,240.58.
On the data front, US wholesale inventories rose less than initially thought in August amid a sharp moderation in the pace of increase in motor vehicle stocks. If this trend is sustained, it could temper expectations for robust economic growth in the third quarter. The Commerce Department’s Census Bureau said on Wednesday that wholesale inventories edged up 0.1%, revised down from the 0.2% gain estimated last month. Private inventory investment contributed to the economy’s 3.0% annualised growth rate in the second quarter. Inventories and trade are the most volatile components of GDP.
Expected Ranges
AUD/USD: 0.6600 – 0.6800 ▼
AUD/EUR: 0.6000 – 0.6200 ▼
GBP/AUD: 1.9350 – 1.9550 ▲
AUD/NZD: 1.1000 – 1.1200 ▲
AUD/CAD: 0.9100 – 0.9300 ▼