Daily Digest Market Movers: Australian Dollar rises due to RBA’s hawkish stance

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  • China’s NBS Manufacturing Purchasing Managers' Index (PMI) improved to 49.8 in September, up from 49.1 in the previous month and surpassing the market consensus of 49.5. However, the Non-Manufacturing PMI declined to 50.0 in September, compared to 50.3 in August and below the expected 50.4.
  • The Reserve Bank of Australia’s (RBA) hawkish stance contributes to the upside of the Australian Dollar. The RBA kept its cash rate at 4.35% for a seventh consecutive meeting and stated that the policy would need to stay restrictive to ensure inflation slowed.
  • St. Louis Federal Reserve President Alberto Musalem stated on Friday, according to the Financial Times, that the Fed should begin cutting interest rates "gradually" following a larger-than-usual half-point reduction at the September meeting. Musalem acknowledged the possibility of the economy weakening more than anticipated, saying, "If that were the case, then a faster pace of rate reductions might be appropriate."
  • During his China visit, Australian Treasurer Jim Chalmers had candid and productive discussions with the National Development and Reform Commission (NDRC). Chalmers highlighted China's economic slowdown as a key factor in weaker global growth while welcoming the country's new stimulus measures as a "really welcome development."
  • US Gross Domestic Product Annualized increased at a rate of 3.0% in the second quarter, as previously estimated, according to the US Bureau of Economic Analysis (BEA) on Thursday. Meanwhile, the GDP Price Index rose 2.5% in the second quarter.
  • China plans to inject over CNY 1 trillion in capital into its largest state banks, facing challenges such as shrinking margins, declining profits, and increasing bad loans. This substantial capital infusion would mark the first of its kind since the 2008 global financial crisis.


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