- Markets priced in a greater risk of an October RBA rate cut.
- ECB delivered on all policy fronts but market expects more to come.
EUR/AUD is on the front foot following a poor result in the Aussie Unemployment data which saw a rise on the number of 0.1% vs expectations and prior. Subsequently, EUR/AUD shot up to the vicinity of the 1.63 handle overnight.
EUR/USD is currently trading at 1.6252, rather flat on the Asia session so far having done most of the leg work on the data release and subsequent trade thereafter thought European markets. The US supply took the pair down to a low of 1.6234.
“AUD/USD was already softening in sympathy with CNH when Australia’s August labour force survey revealed a 12-month high unemployment rate of 5.3%. The Aussie fell through 0.6800 as markets priced in a greater risk of an October RBA rate cut,” analysts at Westpac explained.
More to be expected from ECB
Meanwhile, looking to the ECB, while the central bank delivered on all policy fronts; the markets were looking for more, so the euro is unlikely to find too much of a bid with pending rate cuts around the corner – Indeed, the “adequacy” of the package, as well as the introduction of a tiered deposit system, left the markets puzzled which makes for a treacherous plan in the euro, especially given the Federal Reserve’s hawkish cut which exposes the downside in EUR crosses.