Aussie Dollar Hits 9-Month Low
The Australian dollar fell below $0.69, hitting its lowest level since late January as the US dollar strengthened on growing expectations of a Federal Reserve interest rate hike. The odds of a half-percentage-point Fed rate hike in December surged after US inflation accelerated more than expected in October and policymakers signaled willingness to tighten policy more aggressively. In contrast, weak housing data and a significant drop in both consumer and business confidence in Australia prompted traders to largely rule out a further interest rate increase by the Reserve Bank of Australia in December. After the central bank had increased interest rates five times this year, which brought 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. Meanwhile, a broader selloff in global equity markets added pressure to the risk-sensitive Aussie.
The Australian dollar fell below $0.69, hitting its lowest level since late January as the US dollar strengthened on growing expectations of a Federal Reserve interest rate hike. The odds of a half-percentage-point Fed rate hike in December surged after US inflation accelerated more than expected in October and policymakers signaled willingness to tighten policy more aggressively. In contrast, weak housing data and a significant drop in both consumer and business confidence in Australia prompted traders to largely rule out a further interest rate increase by the Reserve Bank of Australia in December.
After the central bank had increased interest rates five times this year, which brought 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. Meanwhile, a broader selloff in global equity markets added pressure to the risk-sensitive Aussie.