The Australian dollar is the strongest major currency on Monday, helped by firmer Chinese data and RBA remarks that keep further tightening possible. The Canadian dollar also holds firm, while the French 10-year yield near 4.88% and falling European equities point to an uneven market rather than a broad risk-on move.
The Australian dollar is the day's strongest major currency, outperforming the euro, Canadian dollar, New Zealand dollar and yen. ActionForex says the broad-based gains suggest Australia-specific developments, reinforced by China's economic data, are providing more support than the general currency environment.
China data and RBA comments support the Aussie
China's Q3 GDP grew 4.5% year on year, against a 4.4% forecast. September retail sales rose 1.1% against a 0.5% forecast, and industrial production came in at 5.5% against 5.4%.
RBA Assistant Governor Christopher Kent said neutral interest rates appear to be rising, which could make the current 4.60% cash rate less restrictive than previously assumed. However, he also acknowledged that the labor market is loosening faster than expected, with September employment down 39.3K and unemployment at a five-year high of 4.7%.
Markets currently assign roughly 25–30% probability to another hike in November. Australia's quarterly CPI report on October 28 comes before the November 2–3 RBA meeting.
Loonie holds up despite softer core inflation
The Canadian dollar kept much of its strength even though core measures of inflation eased. According to the source, CPI-trim fell from 1.9% to 1.8%, CPI-median from 2.0% to 1.9% and CPI-common from 2.6% to 2.4%, all below forecasts. Headline CPI, however, accelerated from 3.0% to 3.1%, a gap the source largely explains by energy.
USD/CAD rose from around 1.4077 to 1.4105 after the release, a relatively contained reaction. Elevated oil supports the currency: Brent trades around $108 a barrel, down approximately 1.55% on Monday after a 3.7% gain to $109.86 on Friday.
French yields press toward 5%
Europe looks more cautious. France's 10-year yield is around 4.88% after weekend unrest that led to more than 2,000 arrests, and the OAT–Bund spread is around 145bps. Germany's DAX is down 1.29%, France's CAC 40 is down 1.44% and Britain's FTSE 100 is down 1.21%.
Two events are next. The National Assembly votes Tuesday on the revenue portion of the 2027 budget, and Moody's is scheduled to review France's Aa3 rating, which carries a negative outlook, on Friday.
Source: ActionForex
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