International News

Cooling Expectations for Fed Rate Cuts, ECB Eyes Aggressive Easing

💡 U.S. Market Update
Federal Reserve officials have softened market expectations for rate cuts. Many voting members suggest that the pace of rate reductions will likely slow in the coming quarters. However, if the labor market weakens sharply, calls for accelerated rate cuts may increase. 📉

The U.S. dollar index has been on a steady rise, climbing for three consecutive weeks. On Monday, it jumped over 0.4%, hitting 104 for the first time since August 1. 📈

💡 Europe’s Central Bank Moves
The European Central Bank (ECB) carried out its third rate cut this year. ECB officials, including Kazimir, are optimistic about inflation returning to target levels next year, but they stress that more evidence is needed before declaring victory.

ECB board member Simkus suggested that if inflation continues to decline, more rate cuts could follow. Notably, Germany’s September Producer Price Index (PPI) dropped more than expected, falling 1.4% year-on-year, mainly due to lower energy costs.

The ECB is already considering a 50-basis-point rate cut in December, though officials are yet to reach a consensus. Economists and traders widely predict the ECB will act again next month, with growing bets on aggressive easing.

💡 Currency Movements
The dollar’s strength sent non-U.S. currencies tumbling:

• 🇪🇺 Euro fell 0.47% against the dollar.
• 🇬🇧 British pound dropped 0.49%.
• 🇦🇺 Australian dollar slid 0.71%.
• 🇯🇵 Japanese yen plunged 0.83%, hitting 150.89, its lowest in over nine weeks.

💬 Experts believe Japan’s internal disagreements over monetary policy and frequent government interventions could hinder rate hikes, further pressuring the yen.

Meanwhile, offshore yuan dropped nearly 200 points, trading between 7.1081 and 7.1380.

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Australian Market Update

Strong Dollar Drags Down AUD

🇦🇺 The Australian dollar faced a significant decline this week, dropping 1.2% against the U.S. dollar on Monday and closing at 0.6658. By Wednesday, it had fallen to 0.6615, its lowest point in weeks.

The AUD remains under pressure due to robust U.S. economic data and rising U.S. Treasury yields. Market speculation that the Federal Reserve may not aggressively cut rates has also supported the dollar’s strength.

📉 AUD Technical Analysis

• Moving averages (5, 10, and 21 days) indicate a downward trend.
• Key support levels include the 200-day moving average at 0.6628 and September’s low of 0.6622. A break below could lead to a test of the 61.8% Fibonacci retracement level at 0.6575.

🤔 What’s Next?
With no major data releases or Reserve Bank of Australia (RBA) speeches scheduled, the Australian dollar’s trajectory will likely depend on global risk sentiment and the dollar’s performance.