Australian Dollar Rises from Multi-Month Lows

The Australian dollar rose toward $0.70, bouncing off multi-month lows after a top central bank official questioned whether rates were restrictive enough. Despite four rate hikes this year, RBA Assistant Governor Christopher Kent questioned whether monetary policy was restrictive enough, citing evidence that neutral interest rates were rising in Australia and abroad. A higher neutral rate could mean the 4.6% cash rate is exerting less pressure on demand and inflation than expected, keeping the door open to further tightening. Kent also acknowledged signs of labor market easing but cautioned against over-interpreting monthly data after unemployment rose to a five-year high of 4.7% in September. Elsewhere, the Aussie also gained some ground against the US dollar after remarks from Fed officials signaled no urgency to tighten policy. Fed Chair Kevin Warsh said at an IMF event that he does not “prejudge” rate decisions, offering no clues ahead of the October 27-28 policy meeting.

AUDUSD decreased to 0.69, the lowest since July 2026. Over the past 4 weeks, Australian Dollar US Dollar lost 2.49%, and in the last 12 months, it increased 6.58%.

The Australian dollar held around $0.69, staying near its lowest level since mid July, after an unexpected weak jobs report led traders to scale back expectations on further rate hikes. The jobless rate stayed at a five-year high of 4.7%, above the 4.6% forecast, while the previous month's reading was revised up from an initial 4.6%. The economy also shed 39,300 jobs, the biggest monthly fall since February last year, compared with expectations for a 20,000 gain. The figures suggested the labor market may be loosening after the Reserve Bank of Australia raised its cash rate by 1 percentage point to 4.60% this year to rein in inflation, marking one of the most aggressive tightening cycles among developed economies. Markets now see less than a 10% chance of a November hike, down from 35% earlier, while the odds of a December move fell to 30% from 60%. Focus now turns to Governor Andrew Hauser’s speech next week and Q3 CPI data due later this month for further clues on the policy outlook.