- AUD/USD hit a multi-year low around 0.6574 but has bounced back to gain 0.29%.
- The Summary of Economic Projections (SEP) said Fed officials see rates around 4.4% at the end of 2022.
- The U.S. Labor Department reported that jobless claims rose less than expected but exceeded previous data.
AUD/USD bounces off YTD lows hit around 0.6574 and is back above the psychological 0.6600 level as the dollar weakens after aggressive rate hikes by the Fed opened the door for further hikes. While the above would support the dollar, AUD/USD is rising and trading at 0.6642 at the time of writing.
Global stocks remain on the back foot with heavy losses. Global central banks continue to tighten monetary conditions amid double-digit inflation in some countries. On Wednesday, the Fed raised rates by 75 bps. According to the Survey of Economic Projections (SEP), Fed officials estimate a rate hike of another 120 basis points, with the federal funds rate (FFR) at around 4.4% by the end of the year.
AUD/USD recovers as US dollar falls
On Thursday, the Labor Department showed that U.S. jobless claims rose by 213,000 in the week ended Sept. 17, less than an estimate of 217,000 but above the previous figure, revised downward to 208,000. the first week of aid decreased by 22 thousand to 1.379 million in the week ending September 10.
Meanwhile, the absent Australian economic chart left traders digesting previously published RBA minutes. The central bank noted that it is not on a “pre-determined path and will be balanced to try to keep the economy on an even keel”. In addition, most RBA board members have begun to consider raising rates more slowly as the cash rate rises.
However, Westpac analysts expect RBA to a 50 basis point increase in October, then 25 basis points in November, December and February, bringing rates to 3.6%.
What to watch
On Friday, the Australian Economic Outlook will include the S&P Global Manufacturing, Services and Composite PMIs.
United States calendar will also reveal global S&P PMIs along with a speech by Fed Chair Jerome Powell at around 18:00 GMT.