🌏 Global Markets:

Mixed U.S. Economic Data, Focus on Election Outcomes 🇺🇸📊

This week, U.S. economic data painted a mixed picture:

• Consumer Spending Boom: Consumer spending surged significantly, but Q3 real GDP growth fell short of expectations.
• Core Inflation: Core PCE inflation rose by 2.2% month-over-month, cooling further but still higher than forecasts.
• Labor Market Strength: October’s ADP employment report surprised markets with 233,000 new jobs, showing the fastest hiring pace in over a year.

In Europe, Q3 Eurozone GDP grew 0.9% year-on-year, beating expectations. European Central Bank (ECB) officials remain cautious about high service inflation and warn against rushing rate cuts.

📝 Interest Rate Updates:

• U.S.: Markets now see a 94.7% chance of the Federal Reserve cutting rates by 25 basis points in November, down from nearly 100%.
• Europe: The probability of the ECB cutting rates by 50 basis points in December has dropped to 25%.

Market Highlights:

• The Dollar Index (DXY) fell slightly by 0.2%, hovering near 104.09, with fluctuations following U.S. employment data.
• The Japanese Yen remained steady, trading at ¥153.38 against the dollar.
• Offshore Chinese Yuan rose by 170 points to 7.1255, supported by the weaker dollar.

👀 Looking Ahead: Friday’s Non-Farm Payrolls report could determine whether the Fed pauses rate cuts in December.

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🇦🇺 Australian Market: AUD Faces Pressure Amid Lower CPI 📉💰

Australia’s economic updates this week offered a mix of signals:

• Inflation Slows: Q3 Consumer Price Index (CPI) rose just 0.2% quarter-over-quarter, below expectations, and annual CPI growth fell to 2.8%—back within the Reserve Bank of Australia’s (RBA) target range for the first time since 2021.
• Core Inflation: Core inflation eased slightly to 3.5%, but policymakers emphasize it remains too high for rate cuts.

📈 Interest Rate Outlook:
The RBA is unlikely to lower the 4.35% cash rate in its upcoming meeting, with markets predicting only a 23% chance of a rate cut in December and a 42% chance by February. Analysts expect the RBA to hold off on any moves, closely watching global events like the U.S. election.

💵 AUD Performance:
The Australian Dollar (AUD) remains under pressure, hovering around 0.6570 against the U.S. dollar.

Short-term trends point to continued bearish momentum as the AUD trades in a descending channel.

Analysts suggest the AUD could test the lower support levels of 0.6510 or even the key psychological level of 0.6500.