On Wednesday (October 30), against the backdrop of US ADP employment data exceeding expectations and GDP slightly below expectations, the US dollar index showed a volatile trend, closing slightly lower at 104.06. The movements of the yen and the Australian dollar caught market attention. The US dollar/Japanese yen remained steady at 153.41, while the Australian dollar rose by 0.26% to 0.6577 USD, both influenced by the global macro environment and their respective central bank policy expectations.
The Bank of Japan will hold a rate meeting on Thursday, with the market widely expecting it to maintain its ultra-low rate of 0.25%. However, the BOJ's recent hawkish stance has provided support for the yen. If the yen continues to devalue sharply, Japanese government intervention cannot be ruled out. Analysts suggest that the BOJ might shift towards a moderately hawkish approach to prevent domestic economic imbalances and control exchange rate fluctuations, especially as domestic inflation gradually approaches the 2% target.
Regarding the Australian dollar, although the recently released Australian third-quarter Consumer Price Index (CPI) was below expectations, the core inflation rate remained high at 3.5%, leading the market to expect that the Reserve Bank of Australia will keep the interest rate unchanged at 4.35% next week. Luci Ellis, chief economist at Westpac Bank, stated that the possibility of the RBA turning to rate cuts in the short term is low, but it may soften its tone on interest rate outlook at the next meeting to adapt to global economic uncertainties.
The market will next focus on Friday's US non-farm payroll data. The performance of the non-farm payrolls could significantly impact the Federal Reserve's policy path, thereby influencing the trends of the yen and the Australian dollar. The strength or weakness of the non-farm data might directly affect the Fed's decision to either raise or slow down rate increases, having a potential impact on the trends of the US dollar, yen, and Australian dollar.
