The Australian Dollar (AUD) has extended its rally against the US Dollar (USD) for a second consecutive day, reaching 0.6980, up more than 0.50%. This surge comes as risk appetite improves and is bolstered by stronger-than-expected economic data from China, Australia's largest trading partner.
China's GDP grew 4.5% year-over-year in Q3 2026, up from 4.3% in the previous quarter and exceeding forecasts. Retail Sales also showed a significant improvement, rising 1% year-over-year in September, double the expected 0.5% increase. These positive economic indicators have provided a solid foundation for the AUD's recent gains.
Meanwhile, geopolitical tensions in the Middle East persist, with the Houthis claiming six attacks on Saudi Arabia in the last 48 hours. However, reports from Al Araby and Al Jadeed suggest a potential breakthrough this week that could halt the escalation between Washington and Tehran. In the US, the economic calendar was light, but the US Dollar Index (DXY) edged higher by 0.19% to 101.97.
House National Economic Adviser Kevin Hassett acknowledged on CNBC that inflation 'looks like it is needing some work,' marking the first official recognition of higher prices in the Trump administration. While money markets do not expect a Fed rate hike in October, the odds for a December hike stand near 91%, according to Prime Terminal.