AUD / USD plummets towards 0.7050 on expectation of rate cut in Australia and dollar rise

• AUD / USD has the most significant drop in weeks.
• The dollar gains momentum in the market due to a sharp fall in the stock markets.

He AUD / USD extended losses in recent hours and fell to 0.7066, reaching the lowest level since September 28. It is trading 0.7085, trying to break away from the lows but still under pressure from a rise in the dollar and pressured by the expectation of a rate cut by the Reserve Bank of Australia (RBA).

The Australian employment data, which while above expectations, the unemployment rate confirmed a rise to 6.9%, triggered the fall of the Aussie. Then followed statements by RBA Governor Lowe, who with his words gave clear signals that more measures are coming in November, which would include a cut in interest rates, and in the objectives of bond yields.

In addition to the weakness of the Aussie due to the expectation of Australia’s monetary policy, it is added that the bags are falling in the world. The lack of an agreement in the US for the introduction of a new fiscal stimulus, plus the uncertainty in the context of the political campaign are added to the new restrictions on circulation in Europe due to the advance of the coronavirus.

Wall Street futures point to an open with falls greater than 1% in the main stock indices. The dollar is being favored in this context, especially against currencies linked to commodities and those of emerging markets.

In the next few hours the focus of attention will be on the European Union summit and on the US data, which includes on Thursday the weekly report of unemployment benefit requests and the Philadelphia Federal Reserve manufacturing survey of October.