The Australian Dollar faced a slight decline, even with strong consumer confidence data. The AUD/USD was trading around 0.6530 as traders remained cautious, waiting for a decision from the US House of Representatives on government funding. Hawkish remarks from the Reserve Bank of Australia’s Deputy Governor lent some support to the AUD, warning against early monetary easing. Additionally, a notable 12.8% rise in Westpac Consumer Confidence to 103.8 marked the largest increase in seven years, further supporting the currency.

US Government Shutdown

In the US, the Senate approved a bill to end the federal government shutdown, with traders on standby for the House’s decision. The US Dollar remained stable amid expectations of Federal Reserve rate cuts in December, especially given weak labor market data. A table indicated that the AUD was the strongest against the British Pound, and a heat map showed percentage changes of major currencies. Future movements of AUD/USD will likely depend on US fiscal developments and statements from the Federal Reserve. Note: This summary provides factual information about currency movements and economic indicators without subjective opinions. Currently, AUD/USD is around 0.6530 as the market reacts to mixed signals. The focus in the coming days is on the upcoming vote in the US House of Representatives to resolve a government shutdown that has lasted over 40 days. This political uncertainty is making it a tense time for those dealing with the US Dollar.

Longest US Government Shutdown

This current US government shutdown is the longest in history, exceeding the 35-day shutdown of 2018-2019. This situation could lead to significant market volatility. Recent labor data showed only 150,000 jobs were added in the last Non-Farm Payrolls report, pushing the CME FedWatch tool to show a 75% chance of a Federal Reserve rate cut in December. This economic weakness is limiting any strength in the US Dollar for now. On the other hand, Australia shows resilience, which helps the Aussie dollar hold its ground. The Reserve Bank of Australia has kept its cash rate at 4.35%, supported by a quarterly inflation rate of 4.5%. The recent boost in consumer confidence reinforces their view that it is too early to consider easing monetary policy. In the short term, using options strategies like a short-dated straddle on the AUD/USD could be effective to trade the outcomes of the House vote. A resolution could lead to a relief rally for the US Dollar, reminiscent of the market response after the 2019 shutdown ended, creating an opportunity to short the pair. However, if the stalemate continues, focus may shift back to the weak US economy, likely pushing AUD/USD higher toward 0.6600. Create your live VT Markets account and start trading now.

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