• AUD/USD falls following robust US Nonfarm Payrolls data, reducing the likelihood of aggressive Fed rate cuts.
• Fed Chair Powell signals slower pace of easing, with markets now pricing in a 25 bps cut for November.
• Australian data shows mixed results with strong Retail Sales and trade surplus but ongoing manufacturing contraction and slowing business activity.

The Australian Dollar dropped during the North American session after September’s jobs report in the United States (US), suggesting that the Federal Reserve (Fed) would not cut rates by 50 basis points (bps) at the November meeting. The AUD/USD trades at 0.6796, down over 0.60%.

The AUD/USD extended its losses following September’s monster Nonfarm Payrolls report in the US, which lowered the Unemployment Rate. Average Hourly Earnings were mixed, though overall the data relieved the Fed from lowering rates aggressively.

In September, the Fed cut rates by 50 bps. The swaps markets showed that investors had earlier been  eyeing another one of the same size in the November or December meeting. However, Fed Chair Jerome Powell pushed against this stance on Monday, saying that officials foresaw 50 bps of easing in total at the end of 2024 and that the US central bank is in no rush to cut rates.

According to CME FedWatch Tool data, the markets had priced in a 25 bps cut at the November meeting regarding Fed interest rate probabilities.

Aside from this, Australia’s data witnessed a solid Retail Sales report, and the Balance of Trade in August printed a surplus. Although those conditions could prevent the Reserve Bank of Australia (RBA) from cutting rates, business activity in the manufacturing sector, via the Judo Bank Manufacturing PMI, contracted for eight straight months.