Aussie Dollar Set for First Weekly Gain in Three

The Australian dollar edged higher to around $0.660 on Friday, recouping some losses in the prior session, and headed for its first weekly gain in three weeks.

The Aussie gained support from its US counterpart, as the dollar remained under pressure from rising odds of near-term Federal Reserve rate cuts and worries over the US government shutdown, the first in nearly seven years.

Domestically, the currency also drew additional support from the Reserve Bank of Australia’s more hawkish stance, after policymakers cautioned that inflation was running hotter than anticipated.

Markets now imply about a 45% chance of a quarter-point cut at the November 4 meeting, sharply lower than the nearly 100% probability priced a month ago, reflecting the shift in policy expectations.

Meanwhile, investors assessed latest data showing Australia’s services sector grew for a 20th straight month in September, though at its slowest pace since June.