Australian Dollar Gains as RBA Rate Cut Bets Deteriorate
- Australian Dollar rallies versus USD ahead of RBA rate decision
- Australian Current Account and Chinese PMI crossed the wires
- RBA rate cut bets appeared to deteriorate in data’s aftermath
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The Australian Dollar began rallying against its US counterpart after the Australian Bureau of Statistics released the nation’s Current Account figures. The country’s deficit narrowed to –A$18.1 billion in the third quarter from –A$20.5 billion in the second. More importantly, net exports were shown to have added 1.5 percent to overall GDP, topping forecasts calling for a 1.2 percent reading. This is the largest contribution from the external sector in about six years. Investors cheered the outcome, which seemed to dull worries about negative knock-on effects from slowdown in China.
As for China itself, the country’s Non-manufacturing PMI for November was leaked shortly thereafter and fueled further Aussie gains. The reading came in at 53.6, beating September’s 53.1 result and pointing to faster service-sector activity growth. The Manufacturing PMI figure crossed the wires minutes later and missed the 49.8 estimate, coming in at 49.6. The AUD/USD briefly paused its rally and corrected lower, but the move would prove to be short-lived.
Overall, the data appeared to decrease RBA rate cut bets in the near-term. The markets are not expecting the central bank to reduce its interest rate at the December policy meeting. In addition, the priced-in probability of a 25bps RBA rate cut in the next 12 months is now hovering near a four-month low at 64 percent.
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