- On Friday, AUD/USD rates are rising after data on the American Producer Price Index (PPI) showed falling inflation.
- The core PPI index in the US increased, as expected, by 0.2% m/m, while the annual PPI fell to 1.8%, increasing the likelihood of the Fed cutting interest rates.
- Swaps markets show a 95.6% chance of a 25 basis point Fed rate cut in November, down from 83.3%.
The Australian dollar gained slightly against the Australian dollar on Friday after a measure of prices paid by producers confirmed that inflation was falling, justifying further monetary easing by the Federal Reserve. The AUD/USD rate is at 0.6748, registering a moderate gain of over 0.12%, although weekly losses are expected to be over 0.60%.
AUD/USD rises as US PPI data reinforces expectations for Fed’s 25 basis point rate cut in November
Data from the U.S. Bureau of Labor Statistics (BLS) showed that the Producer Price Index (PPI) was unchanged at 0% for September, below August’s 0.2% month-on-month gain. After excluding variable items, the so-called Core PPI rose 0.2% month-on-month as expected, compared with 0.3% the previous month.
On a year-over-year basis, PPI rose 1.8%, up from 1.9%, while core prices rose 2.8%, down from 2.6% and fell compact of 2.7%. Today’s data and yesterday’s CPI report indicate that the Fed may lower interest rates at its November meeting.
Swaps markets show the Fed’s chances of a 25-basis-point rate cut at 95.6%, up significantly from 83.3% a day ago when investors trimmed their positions following hawkish comments from the Atlanta Fed’s Raphael Bostic, who said that it is open to reducing or maintaining interest rates at the next two meetings.
In other data, the University of Michigan (UoM) reported that consumer sentiment deteriorated slightly from 70.1 to 68.9 and fell compact of consensus. Americans became gloomy about the higher cost of living and at the same time revised their inflation expectations upwards from 2.7% to 2.9% during the year.
Chicago Fed President Austan Goolsbee contacted Bloomberg praising progress on inflation and the labor market. He added that despite forceful September employment reports, there are no signs of overheating.
Next week’s Australian economic report will be subdued. Level Reserve Bank of Australia (RBA) Deputy Governor Sarah Hunter will hand over the wires on October 15, and employment data will be released on October 16.
As for the US, the calendar will include Fed speakers, the trade balance, retail sales, jobless claims, industrial production and housing data.
AUD/USD Price Forecast: Technical Outlook
From a technical perspective, AUD/USD is in consolidation, but with a slight upward trend. For buyers to resume the uptrend, they need to break the October 9 high of 0.6761, which will enable them to break the weekly high of 0.6809.
Conversely, if sellers step in and push the exchange rate below the 50-day moving average (DMA) at 0.6733, it could open the door to a decline towards the 100-DMA at 0.6691.
Australian DOLLAR PRICE today
The table below shows the current percentage change of the Australian Dollar (AUD) against the major listed currencies. The Australian dollar was strongest against the Japanese yen.
| USD | EUR | GBP | JPY | BOOR | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.05% | -0.07% | 0.39% | 0.17% | -0.20% | -0.28% | 0.12% | |
| EUR | 0.05% | -0.05% | 0.38% | 0.17% | -0.16% | -0.28% | 0.10% | |
| GBP | 0.07% | 0.05% | 0.45% | 0.24% | -0.10% | -0.21% | 0.19% | |
| JPY | -0.39% | -0.38% | -0.45% | -0.24% | -0.56% | -0.67% | -0.36% | |
| BOOR | -0.17% | -0.17% | -0.24% | 0.24% | -0.34% | -0.43% | -0.03% | |
| AUD | 0.20% | 0.16% | 0.10% | 0.56% | 0.34% | -0.13% | 0.27% | |
| NZD | 0.28% | 0.28% | 0.21% | 0.67% | 0.43% | 0.13% | 0.41% | |
| CHF | -0.12% | -0.10% | -0.19% | 0.36% | 0.03% | -0.27% | -0.41% |
The heat map shows the percentage changes of the major currencies relative to each other. The base currency is selected from the left column and the quote currency from the top row. For example, if you select Australian Dollar from the left column and move along the horizontal line to US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).
