The US dollar is nervous ahead of a potential US government shutdown in a few hours, as Republican and Democratic lawmakers remain at an impasse, blaming each other. Apart from delaying this Friday’s critical US monthly jobs report, a shutdown would furlough some 750k federal employees, according to estimates by the nonpartisan Congressional Budget Office. The gathering of military leadership in Quantico by US President Donald Trump and Defense Secretary Pete Hegseth just before the shutdown has drawn scrutiny. So has Trump’s warning of the shutdown leading to massive job losses. Unlike previous shutdowns and the Democrats, Trump did not frame this one as solely a budget fight. Speculation has emerged that the administration could use the shutdown as a cover to permanently trim the federal workforce and align it with Trump’s priorities. 
Meanwhile, increased job insecurity appeared to have depressed the US Conference Board’s consumer confidence index to a five-month low of 94.2 in September, lower than the expectations for a moderation to 96 from 97.8 in August. The difference between US consumers finding it hard to get a job and those who think jobs are plentiful has increased, which is a leading indicator of the unemployment rate that is likely to keep the Federal Reserve on its easing bias at the year’s remaining meetings. That said, markets will pay attention to today’s ADP employment data, ISM employment index, and tomorrow’s initial jobless claims as proxies for Friday’s nonfarm payrolls, which the consensus expects will remain soft below 100k in September.
Against this background, stay positive on the AUD/USD, which rebounded to 0.66 overnight from its 0.6520 floor on September 26. The Reserve Bank of Australia kept its cash rate target unchanged at 3.60% yesterday and signalled that it may pause at its remaining two meetings in November and December too. The central bank aims to evaluate the restrictiveness of its monetary policy following three rate cuts this year. CPI inflation has risen from 1.9% YoY in June to 3% in August, at the top of the RBA’s 2-3% target band. Home prices reported their strongest monthly gain since October 2023. Growth in unit labour costs remained high but was not accompanied by gains in labour productivity. Labour market conditions remained tight amid a recovery in domestic economic activity.
Quote of the Day
“If you wish to travel far and fast, travel light. Take off all your envies, jealousies, unforgiveness, selfishness and fears.”
Cesare Pavese
October 30 in history
In 1964, Japan's first bullet train (Tokaido Shinkansen) departed Tokyo for Osaka, reducing the 6.5-hour journey to 4 hours.
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