• Australian Dollar holds ground ahead of the RBA interest rates decision on Tuesday.
• Australia’s TD Securities Inflation grew 5.7% in September, lower than 6.1% in August.
• US Core PCE for August rose as estimated but lowered than July’s figures.

The Australian Dollar (AUD) holds ground to continue the winning streak on the third successive day on Monday. The AUD/USD pair receives upward support, primarily supported by the Chinese upbeat PMI data released on the weekend. However, the US Dollar (USD) continues to demonstrate resilience after the moderate economic data released on Friday.

Australia’s TD Securities Inflation (YoY) data showed that inflation estimation in September was lower than August’s readings. The Reserve Bank of Australia (RBA) is expected to keep the interest rate unchanged in the upcoming policy meeting on Tuesday.

However, the Consumer Price Index (CPI) in Australia for the month showed improvement compared to July, which could be attributed to the increasing energy prices. The rise in inflation could impact the RBA’s policy decision.

The US Dollar Index (DXY) holds ground to continue to gain in the second trading session after the moderate datasets from the United States (US). Core Personal Consumption Expenditures (PCE) - Price Index (YoY) for August rose as estimated but lowered than July’s figures.

US Core PCE (MoM) showed a soft reading against the market consensus. While the Michigan Consumer Sentiment Index (Sep) improved from the previous figures.

Additionally, the USD’s strength is attributed to the positive performance of US Treasury yields. The yield on the 10-year US Treasury note hovers below the record highs.

Daily Digest Market Movers: Australian Dollar attempts to gain amid market caution surrounding Fed’s interest rates trajectory, RBA decision

• AUD/USD extends gains, trading around 0.6430 at the time of writing during early Asian trading hours on Monday.
• The Aussie Dollar could further face challenges due to increased market caution surrounding the US Federal Reserve (Fed) interest rates trajectory.
• RBA is expected to keep current interest rates at 4.1% in the upcoming policy meeting on Tuesday. 
• Australia’s TD Securities Inflation (YoY) rose 5.7% in September, lower than 6.1% in August.
• Australia’s Monthly Consumer Price Index (CPI) year-over-year for August rose 5.2% as expected, up from the previous rate of 4.9%.
• China’s Manufacturing PMI data rose into positive territory. China’s NBS Manufacturing PMI for August grew to 50.2 from the previous 49.7 figures, exceeding the 50.0 expected.
• Additionally, the Non-Manufacturing PMI rose climbed to 51.7 from the 51.0 previous reading, surpassing the market consensus of 51.5 readings.
• US Core PCE - Price Index (YoY) for August rose 3.9% as estimated, eased from the previous reading of 4.3%. Core PCE (MoM) showed a soft reading of 0.1% against the market consensus to be consistent at the 0.2% prior.
• US Michigan Consumer Sentiment Index (Sep) improved to 68.1 from the previous figure of 67.7, which was expected to remain unchanged.
• After the Friday session, bills were successfully passed in the US to avert a government shutdown, securing funding until November 17. This development has prompted a resumption of the US Dollar Index (USD) upward trajectory.
• Chicago Fed President Austan Goolsbee expressed confidence on Thursday that the Fed will bring inflation back to its target. Goolsbee also highlighted the rare opportunity to achieve this without a recession, indicating the US Federal Reserve’s (Fed) commitment to managing inflation while sustaining economic growth.
• Fed President Thomas Barkin acknowledged that recent inflation data has been positive but emphasized that it's premature to determine the future course of monetary policy. Barkin also noted that the data lost during a government shutdown could complicate the understanding of the economy.
• Traders await US ISM Manufacturing PMI for September ahead of the Fed’s Chair Jerome Powell's speech on Monday. The RBA interest rate decision will be eyed on Tuesday