- Australian Dollar faces challenges due to risk-off sentiment.
- Australia’s Employment Change report failed to support the AUD.
- US Initial Jobless Claims reached 231K the highest level in nearly three months.
The Australian Dollar (AUD) faces challenges and continues the losses on Friday, despite the downbeat economic data from the United States (US) released on Thursday. The AUD/USD pair's weakness might be attributed to a risk-off sentiment, which could be due to the Federal Reserve's (Fed) uncertainty regarding interest rate trajectory. However, the softer US labor market conditions combined with recent inflation data reinforce the perspective that the Fed is unlikely to raise interest rates further.
Australia’s Dollar (AUD) failed to benefit from an upbeat Aussie jobs report and higher inflation expectations. The seasonally adjusted Employment Change reported an increase in October significantly higher than the market anticipation. However, the majority of the jobs were part-time positions, which somewhat diminished the positive impact of the overall headline.
US Dollar Index (DXY) moves sideways with a negative bias after a previous session characterized by volatility but ultimately favoring the Greenback. Despite weak US economic data and downbeat US bond yields, the US Dollar (USD) managed to recover ground. The yield on the 10-year Treasury note bottomed at 4.43% on Thursday.
US Continuing Jobless Claims for the week ending on November 3 reached the highest level since 2022 at 1.865M from the previous reading of 1.833M. Additionally, Initial Jobless Claims for the week ending on November 10 rose to 231K against the 220K as expected, marking the highest level in nearly three months. However, the Philadelphia Fed Manufacturing Survey reported a figure of -5.9, showing an improvement compared to the previous -9.0 print.
Looking ahead, the upcoming US housing data on Friday is expected to provide fresh insights into the housing sector, potentially influencing trading decisions in pairs like AUD/USD.
Daily Digest Market Movers: Australian Dollar weakens on risk-off sentiment due to Fed’s uncertainty
- Australia’s seasonally adjusted Employment Change reported an increase of 55K in October, compared with the market anticipation of 20K and 6.7K in the previous month.
- Aussie Unemployment Rate came in at 3.7% in October as expected against the previous figure of 3.6%.
- Australia’s Wage Price Index grew 1.3% as expected compared to the previous reading of 0.8%. The year-over-year data showed an increase of 4.0% more than the anticipated 3.9%.
- RBA Assistant Governor Marion Kohler noted that inflation's decline will likely be more gradual than expected, due to sustained high domestic demand and strong labor and cost pressures, underscoring the necessity for stricter policies to combat persistent inflation.
- The meeting between US President Joe Biden and Chinese President Xi Jinping has resulted in a commitment to stabilize strained bilateral ties and restore some military-to-military communications.
- President Xi expressed the desire for the US to cease arming Taiwan and to support what China terms as the 'peaceful reunification' with Taiwan. Additionally, there is a request for the US to lift unilateral sanctions and create a fair and just environment for Chinese companies.
- China’s House Price Index declined by 0.38% in October compared to the previous decline of 0.1%, indicating a worsening condition in the country's property sector.
- China's Industrial Production (YoY) showed growth at 4.6% in October, a slight increase from the previous 4.5%, contrary to expectations of consistency. Retail Sales year-over-year saw an uptick to 7.6%, surpassing the anticipated 7.0%.
- US Producer Price Index (PPI) took an unexpected turn in October, declining by 0.5% against the anticipated 0.1% increase. The annual rate also witnessed a drop from 2.2% to 1.3%. These figures align with the softer inflation indicated by Tuesday's US Consumer Price Index (CPI) data.
- US Retail Sales declined by 0.1% in October, defying expectations of a steeper slide of 0.3%.
- The US Consumer Price Index (CPI) for October showed lower readings than expected, with the annual rate slowing from 3.7% to 3.2%, falling below the consensus forecast of 3.3%. The monthly CPI reduced to 0.0% from 0.4%.
- The US Core CPI rose by 0.2% below the expectations of 0.3%, and the annual rate decreased to 4.0% from 4.1% prior.
Technical Analysis: Australian Dollar holds ground above the 0.6450 major level backed by nine-day EMA
The Australian Dollar trades around the 0.6460 level on Friday, aligned with the immediate major support at 0.6450. Further support may be found at the nine-day Exponential Moving Average (EMA) at 0.6445 and the 14-day EMA at 0.6430. A potential further decline could navigate the pair toward the major support level at 0.6400. On the upside, the AUD/USD pair may encounter immediate resistance at the psychological level of 0.6500. Should it continue its upward movement, the next resistance levels include the 38.2% Fibonacci retracement at 0.6508.
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 weakest against the Japanese Yen.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | 0.08% | 0.24% | 0.06% | 0.16% | -0.03% | 0.31% | 0.02% | |
| EUR | -0.08% | 0.17% | -0.03% | 0.08% | -0.10% | 0.24% | -0.05% | |
| GBP | -0.25% | -0.17% | -0.20% | -0.09% | -0.28% | 0.07% | -0.21% | |
| CAD | -0.06% | 0.06% | 0.20% | 0.15% | -0.09% | 0.27% | -0.02% | |
| AUD | -0.16% | -0.08% | 0.05% | -0.14% | -0.18% | 0.16% | -0.14% | |
| JPY | 0.03% | 0.13% | 0.28% | 0.10% | 0.18% | 0.33% | 0.04% | |
| NZD | -0.31% | -0.26% | -0.07% | -0.26% | -0.15% | -0.37% | -0.29% | |
| CHF | -0.03% | 0.05% | 0.22% | 0.03% | 0.15% | -0.06% | 0.27% |
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).
Australian Dollar FAQs
What key factors drive the Australian Dollar?
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.
How do the decisions of the Reserve Bank of Australia impact the Australian Dollar?
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.
How does the health of the Chinese Economy impact the Australian Dollar?
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.
How does the price of Iron Ore impact the Australian Dollar?
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.
How does the Trade Balance impact the Australian Dollar?
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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