- AUD is up on the day so far as early data gives the bulls a head start.
- PMI Composite index pops to 53.6 from 51.1 last month on strong Services number.
AUD/USD is currently trading at 0.7131 between a range of 0.7112 and 0.7139 and up some 0.2% on the day so far.
Early Asia has been kind to Aussie bulls with the price of the currency extending its late New York gains with a robust Construction PMI report, solidly above the 50.0 expansion level, arriving at 54.2.
Services PMI arrived at 53.8 vs. 50.8 last month taking the Composite index to 53.6 from 51.1 last month.
However, markers are expecting a lot more easing to come from the reserve Bank of Australia.
Analysts at ANZ Bank noted, however, that, overall, activity is up marginally around Australia.
”Though as Victoria has eased some restrictions and more are likely to end in early November, we expect the next month or so will see quite a lift. We have already seen this in regional Victoria with lifts in activity there flowing through to the data.”
Meanwhile, monetary policy remained centre stage this week and the minutes of the October RBA Board meeting confirmed support amongst members for additional easing at the November meeting.
Last week’s speech by Governor Lowe also communicated the scope for easing the RBA has and the intent behind it.
The PMIs were refreshing, but other data that became available this week highlighted the uncertainty over the outlook, particularly with respect to consumer demand, as analysts at Westpac explained.
”Retail sales fell 1.5% in September according to the ABS’ preliminary estimate. This outcome was weaker than the market anticipated, and also softer than our Card Tracker implied.”
”Significantly, the ABS reported that all states saw a decline in sales in September. The final report for the month will provide greater detail on the value of sales as well as volume estimates.”
Overall, the analysts anticipate real household consumption will claw back about a third of Q2’s decline in Q3.
Aussie CPI on the horizon
Looking ahead, Quarter 3 CPI for Australia in slated for next week which will be important.
”We expect a 1.1% rebound in headline inflation but a flat outcome for the trimmed mean core measure. These forecasts, if realised, would see the headline and trimmed mean annual rates at 0.3%year and 0.8%year respectively, highlighting the degree of slack in our economy and the need for additional support from the RBA as above,” the analysts at Westpac explained.
US Election Debate
For the day ahead, the focus is not on the final US Election Debate.
The president is trailing in the polls and his debate with former VP Biden is a chance to shake up the race and rock markets.
Our experts, Joseph Trevisani and Yohay Elam, will analyze the market reaction to the last presidential debate at 00:45 GMT. Stay updated here!