• Australian consumer confidence expected to decline by 0.7%
• Australian business confidence projected to fall to -2

The Australian dollar lost ground earlier in the day but has pared these losses. In the North American session, AUD/USD is trading at 0.6381, down 0.05%.

Australian confidence indicators expected to fall

The markets are braced for a deceleration in consumer and business Confidence indicators, which will be released on Tuesday. Westpac consumer confidence change is expected to decline by 0.7% in October, following a 1.5% decline in September. Consumers remain pessimistic about the economic outlook, and the index, which is currently at 79.7, has been below the neutral 100 level since March 2022. The NAB business confidence index is expected to fall to -2 in September, after improving to 2 in August, the highest level since January.

The Reserve Bank of Australia left rates unchanged last week and will meet next on November 7th. This provides the central bank time to evaluate key data, including third-quarter inflation later this month. The RBA has paused for four straight times but can’t start to think about trimming rates until inflation, which rose to 5.2% in August, is closer to the 2%-3% target range.

US nonfarm payrolls barnburner

US Nonfarm Payrolls soared in September, with a huge increase of 336,000. This crushed the market consensus of 170,000 and the upwardly revised August reading of 227,000. The unemployment rate remained at 3.8%, compared to the market consensus of 3.7%. Wage growth decelerated in September – from 0.3% to 0.2% m/m and from 4.3% to 4.2% y/y. This is another sign that inflation is easing.

The blowout nonfarm payrolls led to the Fed futures market increasing the odds of a rate increase before the end of the year, which currently stands at 31%, according to the CME FedWatch tool. The Fed has been signalling that rates will remain “higher for longer” and traders are concerned that the Fed’s scenario could play out, especially with the US posting strong releases such as Friday’s nonfarm payrolls.

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AUD/USD Technical

• AUD/USD is testing support at 0.6372. Below, there is support at 0.6299
• There is resistance at 0.6430 and 0.6531