Aussie Dollar Slumps to 7-Month Low
The Australian dollar held below $0.69, setting at its lowest level since late March as weak domestic economic surveys and a stronger US dollar weighed on the currency. November consumer sentiment fell to a four-year low, while business conditions remained stuck in negative territory, a level not seen in six years, pointing to persistent weakness in the domestic economy. The disappointing readings reinforced expectations that the Reserve Bank of Australia has completed its tightening cycle following five interest rate increases this year, which raised the cash rate to an eighteen-year high of 4.85%. Markets now imply an 82% probability that rates have peaked, with a quarter-point rate cut fully priced in by the end of 2027. In contrast, hotter-than-expected US core inflation, which rose 0.3% in October, lifted expectations for a potential 50-basis-point rate hike by the Federal Reserve next month, supporting the US dollar and adding pressure on the Aussie.
The Australian dollar held below $0.69, setting at its lowest level since late March as weak domestic economic surveys and a stronger US dollar weighed on the currency. November consumer sentiment fell to a four-year low, while business conditions remained stuck in negative territory, a level not seen in six years, pointing to persistent weakness in the domestic economy. The disappointing readings reinforced expectations that the Reserve Bank of Australia has completed its tightening cycle following five interest rate increases this year, which raised the cash rate to an eighteen-year high of 4.85%.
Markets now imply an 82% probability that rates have peaked, with a quarter-point rate cut fully priced in by the end of 2027. In contrast, hotter-than-expected US core inflation, which rose 0.3% in October, lifted expectations for a potential 50-basis-point rate hike by the Federal Reserve next month, supporting the US dollar and adding pressure on the Aussie.