The Australian dollar extended weekly gains, rising 0.38% on Friday and ending the week up 0.58% as the US dollar gave back part of its advance on expectations the Federal Reserve will keep rates unchanged in October. AUD/USD finished around 0.6983, while the US Dollar Index added 0.12% to 102.73. US consumer sentiment weakened, with the October index at 46.3 versus 48.1 and below a 47.6 consensus, even as inflation expectations edged up: the one-year measure rose to 4.7% from 4.6%, and the five-year to 3.5% from 3.4%.
Fed Policy Outlook And Market Expectations
FOMC minutes pointed to broad backing for a hike but showed disagreement on whether any move would be precautionary or the start of a tightening cycle, and officials reiterated concern about inflation alongside a strong labour market. Money markets priced an 81% probability of no October hike, but also an 81% chance of a 25-basis-point increase by December, according to Prime Terminal data.
Upcoming Economic Indicators
In the week ahead, focus turns to the RBA minutes and Australian employment figures, while US attention centres on CPI and PPI, followed by Retail Sales, Fed speeches and jobs data.
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