The Reserve Bank of Australia (RBA) is increasingly likely to cut interest rates early next year.

The Australian dollar has slightly weakened, nearing its lowest level in four months, due to ongoing signs of economic slowdown reflected in recent growth data. This has led investors to anticipate a more accommodative monetary policy stance in next week's RBA meeting. Furthermore, GDP data revealed that Australia's economy grew by only 0.3%, highlighting a clear economic deceleration. While the RBA is expected to hold interest rates steady in December, the probability of a rate cut in February has risen based on recent economic indicators. Although the exact timing of a rate reduction remains uncertain, concerns about China's economic challenges and U.S. tax increases could accelerate the RBA's decision to ease rates.

Australia's trade surplus rose to AUD 5.95 billion in October, up from AUD 4.53 billion in September, marking the highest surplus since February. This improvement was primarily driven by increased exports rather than imports. Imports grew marginally by only 0.1%, amounting to AUD 36.20 billion, following declines in recent months. This slight increase was mainly supported by a rise in processed industrial supplies and purchases of intermediate and other goods. Meanwhile, consumer goods imports grew by 0.8% to AUD 11.78 billion. On the other hand, Australian exports surged by 3.6% month-on-month to AUD 42.15 billion, driven largely by higher exports of metals, minerals, and other fuels, with significant growth in shipments to India and Japan.

Australia's economy grew by 0.3% quarter-on-quarter in Q3, following a 0.2% increase over the previous three quarters. This marked the 12th consecutive quarter of growth but fell short of market expectations of 0.4%. Government investment remained robust, showing the strongest quarterly growth in five quarters at 1.5%, contributing 0.4 percentage points to GDP. This was underpinned by record-high public sector investment at 6.3% and increased government spending. While household consumption remained flat, private sector activities continued to support overall economic growth.

Job advertisements in Australia fell by 1.3% month-on-month in November, reversing a 0.7% rise in October. This decline was attributed to rising production costs, with prolonged high interest rates from the RBA compelling companies to cut costs. Madeline Dunk, an economist at ANZ, noted that the surge in job postings during September and October likely resulted from firms accelerating their hiring plans for year-end. However, job advertisements are expected to trend downward early next year.

The yield on Australia’s 10-year government bonds held steady at approximately 4.28% as investors awaited next week's RBA policy meeting. While the central bank is anticipated to maintain its interest rate at 4.35%, it may need to carefully reassess economic data as current growth trends point to a slowdown.