Japanese Yen and Australian Dollar News: AUD/USD Eyes $0.67 on RBA Hold, China Hopes

Will RBA Assistant Governor Brad Jones Discuss US Election Impact?

Shifting focus to the AUD/USD pair, RBA Assistant Governor Brad Jones is on the calendar to speak. Recent inflation data supported a more dovish RBA rate path as the Monthly CPI Indicator dropped from 2.7% in August to 2.1% in September.

The RBA downplayed a December rate cut during Tuesday’s RBA press conference. However, Trump’s victory in the US election might change the narrative. Punitive tariffs on China could weaken demand from China, and consequently, Aussie exports. Australia has a trade-to-GDP ratio of more than 50%, with China accounting for one-third of Aussie exports.

Support for a December RBA rate cut could pull the AUD/USD toward $0.66.

Expert Views on Aussie Inflation and the RBA Rate Path

AMP Head of Investment Strategy and Chief Economist Shane Oliver commented on Tuesday’s RBA interest rate decision, stating,

“RBA held at 4.35% citing inflation still too high, excess demand & still tight labour mkt. But it revised growth underlying infl forecasts down slightly. Guidance looks balanced. We continue to see first cut in Feb. Dec possible but needs very low Oct trimmed mean and higher unemp.”

Will New Stimulus from China Counter Trump’s Tariffs?

While RBA forward guidance is crucial, stimulus measures from Beijing could impact Aussie dollar demand more.

Markets expect significant stimulus from Beijing to boost demand. Hao Hong, strategist/economist for AsiaMoney, commented:

“Chinese stocks surging again – //heard on the street // big stimulus worth 12 trillion coming: 6tn for local government bond swap + 4tn property bailout + 2tn consumption stimulus. If so, while the first ten trillion was previously discussed here, the 2tn for consumption stimulus is new and is what the market has been hoping for. It shows a change of ways to stimulate the economy. Market cheers.”

The AUD/USD rallied 1.66% to $0.66789 on Thursday, November 7, with speculation about a stimulus package intensifying. Concrete measures targeting consumption could ease concerns over Trump’s tariffs, potentially driving the AUD/USD above $0.67.

Australian Dollar Daily Chart

Shifting our focus to the US session, traders should consider Michigan Consumer Sentiment trends. A higher-than-expected Index rise may reduce bets on a December Fed rate cut, potentially dragging the AUD/USD toward $0.66. Conversely, an unexpected fall may soften US dollar demand, potentially driving the AUD/USD above $0.67.