Australia’s October survey showed private-sector contraction and faster price pressures, while FXStreet put the Australian dollar near 0.7020 against the U.S. dollar in early European trading Friday, keeping inflation and interest rates in focus.
Reports by MT Newswires and Dow Jones, citing S&P Global survey data, put the flash Composite PMI Output Index at 47.7 in October, down from 51.3 in September. A reading below 50 indicates contraction. October’s figure was the lowest since March and marked the first contraction in private-sector activity since May. The Services PMI Business Activity Index fell to 47.8 from 51.9, while the Manufacturing PMI rose to 49.7 from 49.6 but stayed below 50.
The survey’s price measures strengthened: input-cost inflation reached its fastest pace since May, and output-price inflation increased for a second month. Jingyi Pan, economics associate director at S&P Global Market Intelligence, said the readings suggested inflation could remain elevated in the coming months. Survey commentary linked weaker demand to low market confidence, higher borrowing costs and inflation pressures.
Reserve Bank of Australia (RBA) Deputy Governor Andrew Hauser said in Sydney on Oct. 21 that the inflation outlook was “materially worse” than projected in the central bank’s August report. The RBA’s cash rate target is 4.60%, effective Sept. 30. The Guardian reported 45% market-implied odds of a rate increase at the Nov. 3 meeting, while ABC News cited Bloomberg data for a 51% estimate. The figures are reports of market pricing, not an RBA forecast.
Hauser said higher interest rates put pressure on mortgage holders, while high inflation particularly burdens low-income renters.
The Australian Bureau of Statistics scheduled its September consumer price index release for Tuesday, Oct. 27, at 8:30 p.m. ET (12:30 a.m. UTC Wednesday, Oct. 28). The Reserve Bank of New Zealand (RBNZ) has a separate policy review scheduled for Wednesday, Oct. 28; its official cash rate is 2.75%. The RBA’s next cash-rate update is scheduled for 10:30 p.m. ET Nov. 2 (3:30 a.m. UTC Nov. 3).
