US

USD is edging higher against most major currencies, with the DXY index closing in on its June 24 high at 101.80. Tightening by other major central banks limits policy divergence with the Fed and suggests DXY could struggle to sustain an overshoot of that level. However, US economic growth outperformance and strong foreign appetite for US securities can override that upside USD constraint.

August Job Openings and Labor Turnover Survey (JOLTS) and September Conference Board Consumer Confidence index are today’s data highlights (both at 3:00pm London, 10:00am New York). The JOLTS print should echo the solid labor demand signaled by the August nonfarm payrolls report and confirm that layoffs remain low. In parallel, the consumer confidence report will test whether the improvement in job availability (“Jobs plentiful” minus “jobs hard to get”) has continued.

AUSTRALIA

As was widely expected, the RBA delivered a 25bps hike to a 15-year high of 4.60% after pausing tightening in June and August. The decision was unanimous with the statement noting that “some of the upside risks [to inflation] flagged in August are materialising.” The RBA also reiterated readiness to “increasing the cash rate target further if needed.”

AUD/USD initially rallied on the hawkish RBA statement, then reversed as Governor Michele Bullock suggested less urgency for additional tightening. Her hope that the four hikes this year would prove sufficient alongside confirmation that the Board considered a pause at today’s meeting took some of the hawkish edge off the decision.

RBA cash rate futures price in 36bps of tightening in the next twelve months. That limits policy divergence with the Fed and offers AUD/USD support. Moreover, Australia’s strategic exposure to commodities linked to energy, AI, and defense remains an important long-term tailwind for AUD.