Japanese yen and Australian dollar news: US and RBA election results

RBA interest rate and press conference in the spotlight

As focus shifts from Japan to Australia, the RBA’s interest rate decision could impact Australian dollar/US dollar pair. Economists expect the RBA to keep its interest rate at 4.35%, paying more attention to the rate announcement and press conference.

Recent inflation data in Australia has increased investor expectations for the RBA’s December rate cut. The annual inflation rate fell from 3.8% in the second quarter of 2024 to 2.8% in the third quarter of 2024. Inflation was within the RBA’s target range of 2-3%. However, core inflation remains the RBA’s concern at 3.5%, despite falling from 4.0% in the second quarter of 2024.

RBA Governor Michelle Bullock’s views on the inflation outlook could be crucial. A move away from the headline numbers could see bets fall on the RBA’s December rate cut, potentially sending AUD/USD lower to $0.66500. Conversely, support for the December rate cut amid expectations for softer inflation trends in the fourth quarter could push AUD/USD below $0.65.

Experts’ views on inflation in Australia and the dynamics of RBA rates

AMP’s head of investment strategy and chief economist Shane Oliver recently backed the RBA’s December rate cut if the monthly CPI indicator continues to fall in October. In September, the monthly CPI fell from 2.7% in August to 2.1%, approaching the RBA’s lower target range.

Australian dollar daily chart

As for the American session on Tuesday, PMI data in the services sector will influence the dynamics of the AUD/USD pair. A better-than-expected ISM Services PMI could boost demand for the US dollar, potentially pushing AUD/USD lower to $0.65. Conversely, weak PMI readings could fuel speculation about Fed rate cuts in November and December, pushing AUD/USD closer to $0.66500.

Beyond the numbers, the results of the US presidential election could have a significant impact on the AUD/USD pair. Signals of a Trump victory could boost demand for the US dollar, potentially pushing AUD/USD below $0.65 amid expectations that tariffs will impact global trade.