Rae Wee reports from Singapore for Reuters, highlighting a rise in the Australian dollar on Thursday following employment figures that surpassed expectations for a sixth consecutive month. Concurrently, the U.S. dollar maintained its position near an 11-week high, bolstered by potential support for former President Donald Trump in the upcoming U.S. election.
China hosted a notable press conference focusing on strategies to revitalize the country’s struggling property sector. However, the event did not significantly influence the markets as policymakers mainly reiterated their intent to support the housing market without introducing new substantial measures anticipated by some investors. The Chinese yuan reversed its initial gains, dipping 0.05% to 7.1225 against the dollar, while its offshore counterpart saw a slight increase to 7.1358 per dollar.
Morningstar equity analyst Jeff Zhang commented that the press conference revealed few new policies to boost home demand, as the minister emphasized municipal governments’ autonomy in relaxing buying restrictions. He expects a quicker implementation of measures, providing funds to distressed developers for home completions, which would thereby bolster homebuyers’ confidence.
In Australia, the dollar, often considered a liquid proxy for the yuan due to economic ties, rose 0.41% to $0.66935. This increase in the Australian dollar came despite disappointments from China, as strong domestic employment data provided a positive offset. Data released on Thursday showed a significant rise in net employment by 64,100 in September, exceeding forecasts of a 25,000 increase, while the unemployment rate remained unchanged. This led traders to reconsider expectations for an interest rate cut by the Reserve Bank of Australia in December.
Abhijit Surya, an economist for Australia and New Zealand at Capital Economics, indicated that the Reserve Bank of Australia is unlikely to cut rates before the first half of the next year due to the robust labor market.
In the broader currency market, the U.S. dollar maintained a robust position, having reached an 11-week high against other major currencies in the previous trading session. The euro declined to its lowest level in over two months at $1.0851, ahead of a European Central Bank monetary policy decision, which is anticipated to include another rate cut. The British pound traded 0.05% lower at $1.2984, hovering near Wednesday’s two-month low triggered by weaker-than-expected UK inflation data. The Japanese yen was near the 150 per dollar level, last noted at 149.50.
Support for the U.S. dollar has been driven not only by favorable U.S. economic data, which has led traders to reassess expectations for Federal Reserve rate cuts, but also by the potential of a Trump victory in the forthcoming election. The dollar index increased by 0.04% to 103.58.
Thierry Wizman, global foreign exchange and rates strategist at Macquarie, noted that Trump’s policies on tariffs, immigration, and taxes could foster a more inflationary outlook in the U.S., reducing prospects for significant Federal Reserve rate cuts. Analysts anticipate the dollar strengthening with a Trump victory and potential pressure on bonds.
Elsewhere, the New Zealand dollar rose 0.12% to $0.6064. However, it was still recovering from losses, having dropped to a two-month low on Wednesday. This decline followed data showing domestic inflation had returned to the Reserve Bank of New Zealand’s target range of 1% to 3% in the third quarter, which allows for the continuation of aggressive rate cuts by the central bank.
