The Australian Dollar experienced a modest rise as anticipation builds for the Reserve Bank of Australia’s (RBA) upcoming policy decision. The latest data from the Judo Bank Services and Composite Purchasing Managers Index (PMI) indicated positive shifts, with the Services PMI increasing to 51.0 in October from 50.6 in September, while the Composite PMI rose to 50.2, surpassing previous figures.
Market observers expect the RBA to maintain the Official Cash Rate (OCR) at 4.35% for an eighth consecutive time during its policy meeting. As the bank prepares to release its insights, traders will be keenly watching for revisions to economic forecasts and comments from Governor Michele Bullock regarding potential future rate changes, particularly the timing of any first cuts since the tightening phase that followed the pandemic.
Concurrently, developments in the U.S. are creating a backdrop of uncertainty that affects the US Dollar. The current presidential election campaign has intensified, with former President Donald Trump and Vice President Kamala Harris both asserting confidence in their chances of victory. Polls suggest a tight race, particularly in battleground states like Pennsylvania, and analysts predict that the final results may take time to confirm, raising concerns over contestation similar to past elections.
As the electoral landscape shifts, the US dollar faces pressure linked to shifts in public sentiment, as evidenced by a recent poll indicating a narrow lead for Harris in Iowa. Additionally, the Federal Reserve’s impending policy meeting could prompt market reactions, with expectations leaning towards a 25 basis point rate cut. This speculation coincides with signals from other economic markers, including an uptick in the monthly Inflation Gauge and modest movements in job advertisements.
In Australia, recent economic figures showed a continued rise in the Producer Price Index, which increased by 0.9% in the third quarter and highlighted ongoing inflation trends. Expectations are tempered, however, as the pace of growth in the job advertisement sector has begun to slow. These mixed signals will be critical as the Australian Dollar tests resistance levels while navigating the broader economic landscape marked by international political uncertainty.
