Australian Dollar Holds Near Multi-Week Lows

The Australian dollar held below $0.70, near multi-week lows as the US dollar strengthened following hawkish Federal Reserve meeting minutes. The minutes showed policymakers viewed inflation as the biggest risk to the outlook, with several participants seeing further rate hikes as appropriate and others judging policy as only mildly restrictive. Still, markets remained skeptical of an October Fed hike, pricing just a 19% probability of a quarter-point increase. In Australia, markets are also pricing just a 25% chance of another RBA hike in November, after last week’s increase to 4.60%. The central bank's October 13 minutes will be on focus, followed by September labor data next week, with the unemployment rate closely watched after rising to a five-year high of 4.6% in August. A steady or higher reading could reduce expectations for further tightening, while the September-quarter CPI report later this month will be crucial, with core inflation expected to remain elevated.