Australian Dollar consolidates post intraday gains, RBA minutes, US Retail Sales eyed

Australian Dollar retraces recent losses pre-release of RBA Meeting Minutes on Tuesday.
RBA is exploring the possibility of introducing a central bank digital currency to save costs of billions of dollars.
Investors hesitate on the Fed interest rate trajectory; contributing to the weakening of the US Dollar.

The Australian Dollar (AUD) kicks off the week by recovering from the three-day losing streak, trading higher against the US Dollar on Monday. The pair faced challenges possibly due to the shift in discussions about the trajectory of the US Federal Reserve's (Fed) monetary policy. Investors are expected to focus on the Reserve Bank of Australia’s (RBA) Meeting Minutes on Tuesday and employment data later in the week.

Australia’s central bank could introduce a central bank digital currency (CBDC). Brad Jones, Assistant Governor (Financial System) at the RBA, discussed the tokenization of assets and money in the digital era at The Australian Financial Review Cryptocurrency Summit. Governor Jones highlighted the potential for tokenized money to bring about significant cost savings, potentially amounting to billions of dollars, in the domestic financial markets.

The National Bureau of Statistics of China reported on Friday that Chinese inflation experienced a decrease in September. This development could exert pressure on the Australian Dollar (AUD). The Chinese data indicates ongoing economic challenges despite the recent government stimulus plan aimed at supporting the nation in achieving its 5% growth target.

The US Dollar Index (DXY) gained upward momentum after the release of robust US data during the previous week, with US inflation surpassing expectations and initial jobless claims coming in lower than anticipated. However, the preliminary US Michigan Consumer Sentiment Index eased in October.

Investors seem to hesitate in taking aggressive bets on the US Dollar (USD) as the Federal Reserve’s (Fed) policy rate trajectory is undecided. Moreover, the recovery in US Treasury yields from the recent losses could provide support in underpinning the US Dollar (USD). Additionally, the Greenback remains to benefit from the safe-haven flow amid the rising geopolitical tension between Israel and Palestine.

Daily Digest Market Movers: Australian Dollar attempts to retrace a three-day losing streak

Reserve Bank of Australia is exploring possibly introducing a central bank digital currency (CBDC).
On Thursday, Australian Consumer Inflation Expectations for October were reported at 4.8%, reflecting a slight increase from the September figure of 4.6%. The rebound in inflation observed in August, primarily influenced by elevated oil prices, raises the likelihood of another interest rate hike by the RBA.
According to the National Bureau of Statistics of China, the Chinese Consumer Price Index (CPI) for September registered at 0% (YoY), a decline from the previous reading of 0.1%. This figure fell short of the market consensus, which anticipated a 0.2% increase. Additionally, the Producer Price Index dropped to 2.5% from a 3% decline in August, missing the expectation of a 2.4% downturn.
The ongoing conflict in the Middle East introduces an additional layer of complexity to the situation. This geopolitical factor could potentially prompt the RBA to implement a 25 basis points (bps) interest rate hike, reaching 4.35% by the end of the year.
According to an undisclosed source to Reuters, US officials and Israel have engaged in discussions about the possibility of a visit by US President Joe Biden to Israel. The invitation for the visit reportedly came from Israeli Prime Minister Benjamin Netanyahu.
The US Bureau of Labor Statistics (BLS) disclosed that the Consumer Price Index in the US surpassed forecasts in September. The annual basis figures expanded at a consistent rate of 3.7%, slightly exceeding estimates of 3.6%.
US Initial Jobless Claims for the week ending on October 6 showed a slight easing, despite an increase of 209K, which was slightly below the forecast of 210K.
On Friday, the preliminary US Michigan Consumer Sentiment Index for October showed a decline to 63.0 from the previous reading of 68.1, falling short of the expected figure of 67.4.
The yields on US Treasury bonds recovers on Monday, with the 10-year US Treasury bond yield standing at 4.66%, up by 1.04%.
Market participants will likely monitor the US Retail Sales on Tuesday, with the figure expected to rise 0.2%. On the Australian docket, attention will be on the Reserve Bank of Australia (RBA) meeting minutes and employment data scheduled for release in the coming week.

Technical Analysis: Australian Dollar consolidates above the psychological support at the 0.6300 level

The Australian Dollar trades higher around 0.6330 during the European session on Monday, in proximity to a significant support level at 0.6300, which aligns with the monthly low at 0.6285. On the upside, a key resistance is observed at the major level at 0.6400, coinciding with the 23.6% Fibonacci retracement level at 0.6429 lined up with the 50-day Exponential Moving Average (EMA) around the 0.6439 level. These technical levels guide traders to assess potential price movements in the Aussie Dollar.

AUD/USD: Daily Chart

Australian Dollar price today

The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the strongest against the .

	USD	EUR	GBP	CAD	AUD	JPY	NZD	CHF
USD		-0.18%	-0.04%	-0.01%	-0.32%	-0.05%	-0.30%	-0.01%
EUR	0.18%		0.15%	0.17%	-0.12%	0.13%	-0.10%	0.17%
GBP	0.04%	-0.14%		0.03%	-0.28%	-0.01%	-0.25%	0.04%
CAD	0.01%	-0.17%	-0.01%		-0.30%	-0.04%	-0.28%	0.01%
AUD	0.32%	0.12%	0.29%	0.29%		0.25%	0.02%	0.31%
JPY	0.06%	-0.11%	0.04%	0.04%	-0.22%		-0.21%	0.05%
NZD	0.29%	0.11%	0.24%	0.28%	-0.02%	0.24%		0.25%
CHF	0.00%	-0.17%	-0.04%	-0.01%	-0.30%	-0.04%	-0.29%

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 Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).

Economic Indicator

Australia RBA Meeting Minutes

The minutes of the Reserve Bank of Australia meetings are published two weeks after the interest rate decision. The minutes give a full account of the policy discussion, including differences of view. They also record the votes of the individual members of the Committee. Generally speaking, if the RBA is hawkish about the inflationary outlook for the economy, then the markets see a higher possibility of a rate increase, and that is positive for the AUD.

Why it matters to traders

The Reserve Bank of Australia (RBA) publishes the minutes of its monetary policy meeting two weeks after the interest rate decision is announced. It provides a detailed record of the discussions held between the RBA’s board members on monetary policy and economic conditions that influenced their decision on adjusting interest rates and/or bond buys, significantly impacting the AUD. The minutes also reveal considerations on international economic developments and the exchange rate value.

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