Australian Dollar Hits 3-Week Low
The Australian dollar fell below $0.70, hitting a three-week low as a sharp technology stock selloff dampened demand for risk-sensitive assets. Often viewed as a proxy for global risk, the currency came under pressure as concerns intensified after the Democrats’ sweeping victory in the US midterm elections raised fears that tighter regulations could slow AI investment. In Australia, uncertainty over the Reserve Bank’s policy path remained in focus after the central bank raised rates for the fifth time this year to an 18-year high. It was met with a closely divided 6—3 vote and less hawkish guidance, boosting expectations that rates had peaked. However, Deputy Governor Andrew Hauser warned that weakening public confidence in the RBA’s ability to control inflation could make disinflation more costly, potentially requiring a more aggressive policy response. Swaps currently imply just a 6% chance of another increase in December, while a quarter-point rate cut is fully priced by year-end.
The Australian dollar fell below $0.70, hitting a three-week low as a sharp technology stock selloff dampened demand for risk-sensitive assets. Often viewed as a proxy for global risk, the currency came under pressure as concerns intensified after the Democrats’ sweeping victory in the US midterm elections raised fears that tighter regulations could slow AI investment. In Australia, uncertainty over the Reserve Bank’s policy path remained in focus after the central bank raised rates for the fifth time this year to an 18-year high. It was met with a closely divided 6—3 vote and less hawkish guidance, boosting expectations that rates had peaked.
However, Deputy Governor Andrew Hauser warned that weakening public confidence in the RBA’s ability to control inflation could make disinflation more costly, potentially requiring a more aggressive policy response. Swaps currently imply just a 6% chance of another increase in December, while a quarter-point rate cut is fully priced by year-end.