Australian dollar falls ahead of RBA minutes

The Australian dollar has started the week in negative territory. In the North American session, AUD/USD is trading at 0.6760, down 0.40%. The Australian dollar is down 2.2% in the month of October.

Will RBA minutes provide any hints of a rate cut?

The Reserve Bank of Australia will release the minutes of the September 24 meeting early on Tuesday. Will the RBA tip its hand about a possible rate hike? The central bank has been an outlier among the major central banks, most of which have started to lower rates in response to falling inflation. The Federal Reserve joined the club in September with an oversize 50-basis point cut and it’s uncertain what will be the size of the next rate cut.

At the September meeting, the RBA maintained the cash rate at 4.35%, where it has been pegged since November 2023. The hold in rates was considered somewhat dovish in that RBA policy makers did not consider raising rates, which was a departure from previous meetings.

Will sparkling nonfarm payrolls mean a 25-bps Fed cut?

In the US, September nonfarm payrolls surged by 254 thousand, up from a revised 159 thousand in August and blowing past the market estimate of 140 thousand. This was the highest nonfarm payroll release in six months. The unemployment rate dipped lower to 4.1%, compared to 4.2% in August and below the market estimate of 4.2%. Predictably, the strong nonfarm payrolls report has raised the odds of a 25-bps cut from the Fed in November to 83.5%, up from 65% just one week ago, with a 16.5% chance that the Fed will leave rates at the current level.

AUD/USD Technical

• AUD/USD is testing support at 0.6769. Close by, there is support at 0.6745
• There is resistance at 0.6811 and 0.6835

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