International: Powell Eases Aggressive Rate Cut Expectations, USD Hits 1-Year High 💵📈

On Thursday, November 14, the U.S. Bureau of Labor Statistics reported an uptick in October’s Producer Price Index (PPI). Both year-on-year and month-on-month data exceeded expectations, showing a rebound compared to September. While inflation pressures have eased this year, recent data highlights uneven progress.

Although the Federal Reserve (Fed) is expected to cut rates again in December, the latest figures might prompt policymakers to slow the pace of rate cuts. Analysts observed that while PPI data surpassed expectations and the Fed’s 2% inflation target, overall price trends suggest slower price increases. Inflation seems driven by isolated factors.

Notably, service costs continue to rise, echoing the same drivers behind yesterday’s CPI increase. These are components the Fed has limited control over through interest rates. UBS predicts the PPI figures linked to core PCE—the Fed’s favored inflation gauge—remain high.

Meanwhile, the U.S. Dollar Index rose for the fifth straight day, climbing to 106.81, up 0.33% intraday. This pushed non-U.S. currencies down: the Japanese Yen fell below the 156 mark for the first time since July, raising intervention risks, and the Euro hit a nearly 1-year low. Offshore RMB briefly dipped 200 points, falling below 7.26.

Australia: Employment Growth Misses Expectations, AUD Weakens 📉🇦🇺

The Australian Bureau of Statistics revealed that employment rose by just 15,900 in October compared to September—far below September’s 61,300 increase and the forecasted 25,000. This marks the smallest growth in seven months, yet the annual employment growth rate remains strong at 2.7%.

The unemployment rate held steady at 4.1% for the fifth consecutive month, while the participation rate dropped slightly from a record 67.2% to 67.1%.

Analysts suggest that after months of outperforming expectations, the slowdown in employment growth indicates Australia’s resilient labor market might be cooling. This could provide the Reserve Bank of Australia (RBA) some breathing room to focus on inflation while maintaining restrictive interest rates through the end of the year.

The Australian Dollar (AUD) continues to face downward pressure, falling to 0.6476 against the USD—the lowest since August 6. Limited upside potential for the AUD stems from weaker commodity prices and trade-related concerns.