The Australian dollar hit its lowest point since early July, sliding to $0.6894 after a drop of up to 1.1% on Thursday. It was the worst performer among the Group of 10 currencies against the US dollar on the day as traders marked down the odds of more tightening from the Reserve Bank of Australia.
Fresh labor figures signaled a softer jobs backdrop, with unemployment rising and employment falling, which undercut the case for another rate increase. Stocks have been retreating as the AI trade has cooled, steering investors toward bonds.
Even with today's slip, the Aussie remains one of this year's stronger G10 performers versus the greenback, helped by the RBA's aggressive tightening cycle. In September, policymakers raised rates, which took the year-to-date rise to one percentage point. In a note dated Oct. 15, Nomura's Dominic Bunning and Yusuke Miyairi said they closed a recommendation to be long the Australian dollar against the British currency after the pair hit its stop-loss in the past 24 hours, citing stronger UK growth and weaker Australian labor data.
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Hedge funds have scaled back bullish positions for three straight weeks, though they have maintained a positive stance since December. "For now this data affirms a November hold," said Maximillian Lin of Canadian Imperial Bank of Commerce, noting that this pertains to the next RBA meeting. "We still think a December hike is possible" as the jobs numbers are "notoriously volatile."
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