AUD: AUD/USD - Consolidating Above 0.6600-0.6630

ACGBs (YM -2.5 & XM -4.0) are weaker on a data-light session.

• Cash ACGBs are 2-4bps cheaper with the AU-US 10-year yield differential at +33bps.
• The bills strip is -2 to -3 across contracts.
• Interest rate expectations in Australia out to mid-2026 have firmed just shy of 10bps over the past week. The key driver of this move was October’s employment data. The labour market normalised, with unemployment returning to 4.3% after September’s 4.5% spike. OIS pricing implies just a 1% probability of a 25bp December cut (9% pre-data), with cumulative easing of 9bps priced by mid-2026 (down from 17bps pre-data). (see chart)
• Even still, as previously noted, markets may still be overestimating the likelihood of further cuts, given that rising annual inflation has historically ended RBA easing cycles.
• Tomorrow, the local calendar will see RBA Minutes of the Nov. Policy Meeting ahead of the Wage Price Index on Wednesday.
• This week, the AOFM plans to sell A$300mn of the 4.75% 21 June 2054 bond on Tuesday, A$1000mn of the 2.75% 21 June 2035 bond on Wednesday and A$700mn of the 1.25% 21 May 2032 bond on Friday.

Figure 1: RBA-Dated OIS – Current Vs. Pre-Jobs

Source: Bloomberg Finance LP / MNI

The AUD/USD has had a range today of 0.6512 - 0.6537 in the Asia- Pac session, it is currently trading around 0.6520, -0.30%. The AUD/USD has drifted lower in our session being led by the move higher in USD/Asia. The AUD/USD tested the 0.6500 area on Friday but bounced into the weekend with US stocks. The AUD/USD looks a little lost and is chopping around in a clearly defined range. Bitcoin gapped lower on the open but has since recouped all its losses moving back above $95k, the moves in crypto have recently been leading the market but for this to get legs it would need to break below the pivotal $90k area  to add to the current market malaise. The AUD/USD has basically traded 0.6350-0.6650 since April this year and we will need a catalyst for this to break, otherwise it looks like more of the same unfortunately. 

• Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6525(AUD394m). Upcoming Close Strikes : 0.6400(AUD913m Nov 18), 0.6550(AUD674m Nov 20), 0.6600 (AUD679m Nov 18) - BBG
• The AUD/USD Average True Range for the last 10 Trading days: 39 Points

Fig 1: AUD/USD spot Daily Chart

Source: MNI - Market News/Bloomberg Finance L.P

NZGBs closed showing a modest bear-steepener, with benchmark yields 1-2bps higher.

• Today’s move leaves the 2/10 yield curve around cycle highs, the highest since 2021.
• NZGBs outperformed their $-bloc counterparts, with the NZ-US and NZ-AU 10-year yield differentials 1-2bps tighter.
• “On average, respondents believed there was a 38% chance of finding a new job, down from 41.2% in 3q and the lowest since the survey began in 1q 2022.” - RBNZ via BBG
• “October selected prices update presents no obstacles to another rate cut from the RBNZ at next week's policy meeting, said Westpac in a report on Monday. Westpac has revised its forecast for December quarter inflation to +0.3% and +2.8% for the year to December, both down 0.1 percentage points from the bank's earlier forecast.” - BBG
• Swap rates closed 2-3bps higher.
• RBNZ dated OIS pricing closed little changed across meetings. 25bps of easing is priced for November, with a cumulative 34bps by February 2026. Pricing has been relatively stable over the past month. (see chart)
• Tomorrow, the local calendar will see Non-Resident Bond Holdings.

Bloomberg Finance LP