The Australian dollar weakened to around $0.647 on Friday, extending losses from the previous session amid growing bets on a near-term rate cut by the Reserve Bank of Australia. Futures price in roughly an 85% chance of a 25 bps RBA cut to 3.35% on November 4, up from 50% earlier in the week, with a further drop to 3.10% already fully anticipated. This followed a surprise jump in unemployment and fewer jobs added, signaling a further labor market loosening. However, analysts caution the central bank is likely to wait for the Q3 CPI report before deciding on a rate move. Meanwhile, investors continued to weigh risks from the escalating US-China trade tensions. In the latest update, China accused the US of exaggerating its rare earth export controls, calling the resulting “panic” unnecessary while signaling openness to trade talks. Elsewhere, ongoing weakness in the US dollar pressured by trade frictions, the government shutdown, and a slowing US economy, offered support to AUD.
