- AUD/USD lost its traction and declined toward 0.6600 on Thursday.
- Earlier in the day, the pair gathered bullish momentum on upbeat jobs data from Australia.
- Renewed US Dollar strength doesn't allow the pair to push higher.
After rising to a daily high above 0.6630 during the European trading hours on Thursday, AUD/USD reversed its direction and declined toward 0.6600, erasing its daily gains in the process.
US Dollar PRICE Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Japanese Yen.
USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
---|---|---|---|---|---|---|---|---|
USD | 0.48% | 0.08% | 1.15% | 0.09% | -0.09% | 0.40% | 0.82% | |
EUR | -0.48% | -0.42% | 0.64% | -0.39% | -0.66% | -0.25% | 0.33% | |
GBP | -0.08% | 0.42% | 1.07% | 0.02% | -0.23% | 0.18% | 0.84% | |
JPY | -1.15% | -0.64% | -1.07% | -1.07% | -1.25% | -0.88% | -0.24% | |
CAD | -0.09% | 0.39% | -0.02% | 1.07% | -0.18% | 0.15% | 0.82% | |
AUD | 0.09% | 0.66% | 0.23% | 1.25% | 0.18% | 0.40% | 1.07% | |
NZD | -0.40% | 0.25% | -0.18% | 0.88% | -0.15% | -0.40% | 0.67% | |
CHF | -0.82% | -0.33% | -0.84% | 0.24% | -0.82% | -1.07% | -0.67% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
During the Asian trading hours, the data from Australia showed that the Unemployment Rate ticked up to 4.2% in July from 4.1% in June. On a positive note, Employment Change in the same period came in at +58.2K, surpassing the market expectation of 20K by a wide margin. Additionally, the National Bureau of Statistics of China reported that Retail Sales grew by 2.7% on a yearly basis in July, up from the 2% increase recorded in June.
AUD/USD gathered bullish momentum following these data releases and continued to stretch higher in the first half of the day.
In the American session, upbeat macroeconomic data releases from the US provided a boost to the USD and forced AUD/USD to turn south.
The weekly Initial Jobless Claims in the US declined by 7,000 to 227,000 in the week ending August 10. Furthermore, Retail Sales rose by 1% to $709.7 billion in July. Both of those prints came in better than analysts' estimates.
Australian Dollar FAQs
One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.
The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.
China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.
Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
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