- Australian Dollar looks to snap a three-day losing streak.
- Australia’s central bank made a dovish rate statement, weakening the AUD.
- China's CPI declined by 0.2% against the expected decline of 0.1%.
- Investors adopt a cautious stance as Fed officials resist the notion of lowering interest rates.
The Australian Dollar (AUD) attempts to snap a three-day losing streak on the subdued US Dollar (USD), which could be attributed to the downbeat US Treasury yields. However, the AUD/USD pair experienced downward pressure following a dovish rate statement by the Reserve Bank of Australia (RBA) post the policy decision.
Australia’s central bank opts for a data-dependent strategy in response to the persistent challenges posed by inflation and a slowing Australian economy. This approach was underscored by the RBA's decision on Tuesday to raise the Official Cash Rate (OCR) from 4.10% to a 12-year high of 4.35%. The move was a direct response to the latest revealed Monthly Consumer Price Index (YoY) for September, indicating a notable increase of 5.6%, surpassing the expected 5.4% growth.
China's inflation data showed an annual decline in October, exceeding the expected fall. The monthly figures dropped compared to the growth recorded earlier.
The AUD/USD pair confronts challenges amid a tepid market atmosphere this week, with investors awaiting fresh cues before making any moves, especially in light of the upcoming US Federal Reserve (Fed) decision in December.
Cautious sentiment prevails as Fed officials resist the idea of lowering interest rates. Investors will likely focus on the upcoming weekly US Jobless Claims report for potential market impact. Additionally, market participants anticipate insights from Federal Reserve Chair Jerome Powell, who is scheduled to participate in a panel discussion later in the day, focusing on "Monetary Challenges in a Global Economy."
Daily Digest Market Movers: Australian Dollar attempts to halt the losing streak on the downbeat Greenback
- The RBA has resumed policy tightening, raising the Official Cash Rate (OCR) from 4.10% to 4.35% after maintaining the benchmark interest rate unchanged for four consecutive meetings.
- Australia’s TD Securities Inflation (YoY) fell to 5.1% in September from 5.7% prior.
- Australia’s Retail Sales grew 0.2% in the third quarter after contracting by 0.6% in the previous quarter.
- Economists at the National Australia Bank (NAB) anticipate another 25 basis points hike in February following the Q4 inflation data. Additionally, NAB believes that rate cuts are unlikely to commence until November 2024.
- China's Consumer Price Index (CPI) witnessed an annual decline of 0.2% in October, compared to the expected 0.1% decrease. The monthly CPI dropped by 0.1%, contrasting with the earlier 0.2% growth.
- Pan Gongsheng, the Governor of the People's Bank of China (PBOC), expressed optimism in a statement on Wednesday, saying that China's economy is on a positive trajectory and that it is anticipated to achieve the 5% growth target successfully.
- Additionally, the International Monetary Fund (IMF) has adjusted its outlook for China's Gross Domestic Product (GDP) growth, now projecting a 5.4% growth rate in 2023, up from the initial forecast of 5.0%, and 4.6% in 2024, surpassing the previous estimate of 4.2%.
- Fed Governor Michelle Bowman reinforced the opinion that the US Fed is contemplating future increases in short-term interest rates. Moreover, Neil Kashkari, President of the Minnesota Fed, questioned whether the central bank had raised rates sufficiently. Kashkari cited the economy's resilience as a factor influencing his perspective.
- The US Bureau of Labor Statistics recently unveiled the Nonfarm Payrolls (NFP) data for October, disclosing a figure of a 150K increase in jobs. This missed the expected 180K and marked a substantial drop from September's 297K.
Technical Analysis: Australian Dollar hovers around 0.6400 aligned with 21-day EMA
The Australian Dollar hovers around the major support at 0.6400 psychological level on Thursday, with the additional backing of the 21-day Exponential Moving Average (EMA) at 0.6394. A decisive breach below the latter could propel the AUD/USD pair towards a descent, targeting the November low at 0.6318. On the upside, the immediate resistance is the 23.6% Fibonacci retracement at 0.6417, followed by the psychological level at 0.6500 aligned with the 38.2% Fibonacci retracement level 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 New Zealand Dollar.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | 0.10% | -0.12% | -0.02% | 0.03% | 0.11% | -0.35% | 0.02% | |
| EUR | -0.10% | -0.22% | -0.12% | -0.07% | 0.01% | -0.45% | -0.07% | |
| GBP | 0.12% | 0.23% | 0.11% | 0.15% | 0.24% | -0.24% | 0.17% | |
| CAD | 0.02% | 0.12% | -0.09% | 0.09% | 0.13% | -0.30% | 0.03% | |
| AUD | -0.05% | 0.08% | -0.15% | -0.05% | 0.08% | -0.38% | -0.02% | |
| JPY | -0.10% | 0.01% | -0.23% | -0.13% | -0.07% | -0.45% | -0.09% | |
| NZD | 0.33% | 0.50% | 0.21% | 0.35% | 0.39% | 0.47% | 0.45% | |
| CHF | -0.05% | 0.06% | -0.16% | -0.06% | -0.01% | 0.07% | -0.41% |
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).
RBA FAQs
What is the Reserve Bank of Australia and how does it influence the Australian Dollar?
The Reserve Bank of Australia (RBA) sets interest rates and manages monetary policy for Australia. Decisions are made by a board of governors at 11 meetings a year and ad hoc emergency meetings as required. The RBA’s primary mandate is to maintain price stability, which means an inflation rate of 2-3%, but also “..to contribute to the stability of the currency, full employment, and the economic prosperity and welfare of the Australian people.” Its main tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will strengthen the Australian Dollar (AUD) and vice versa. Other RBA tools include quantitative easing and tightening.
How does inflation data impact the value of the Australian Dollar?
While inflation had always traditionally been thought of as a negative factor for currencies since it lowers the value of money in general, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Moderately higher inflation now tends to lead central banks to put up their interest rates, which in turn has the effect of attracting more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in the case of Australia is the Aussie Dollar.
How does economic data influence the value of the Australian Dollar?
Macroeconomic data gauges the health of an economy and can have an impact on the value of its currency. Investors prefer to invest their capital in economies that are safe and growing rather than precarious and shrinking. Greater capital inflows increase the aggregate demand and value of the domestic currency. Classic indicators, such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can influence AUD. A strong economy may encourage the Reserve Bank of Australia to put up interest rates, also supporting AUD.
What is Quantitative Easing (QE) and how does it affect the Australian Dollar?
Quantitative Easing (QE) is a tool used in extreme situations when lowering interest rates is not enough to restore the flow of credit in the economy. QE is the process by which the Reserve Bank of Australia (RBA) prints Australian Dollars (AUD) for the purpose of buying assets – usually government or corporate bonds – from financial institutions, thereby providing them with much-needed liquidity. QE usually results in a weaker AUD.
What is Quantitative tightening (QT) and how does it affect the Australian Dollar?
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the Reserve Bank of Australia (RBA) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the RBA stops buying more assets, and stops reinvesting the principal maturing on the bonds it already holds. It would be positive (or bullish) for the Australian Dollar.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD corrects toward 0.6850, awaits US PCE Price Index
AUD/USD is falling back toward 0.6850 in Friday's Asian trading, reversing from near 19-month peak. A tepid US Dollar bounce drags the pair lower but the downside appears called by the latest Chinese stimulus measures, which boost risk sentiment ahead of US PCE data.
USD/JPY pares gains toward 145.00 after Tokyo CPI inflation data
USD/JPY is paring back gains to head toward 145.00 in the Asian session on Friday, as Tokyo CPI inflation data keep hopes of BoJ rate hikes alive. However, intensifying risk flows on China's policy optimism support the pair's renewed upside. The focus shifts to the US PCE inflation data.
Gold price consolidates below record high as traders await US PCE Price Index
Gold price climbed to a fresh all-time peak on Thursday amid dovish Fed expectations. The USD languished near the YTD low and shrugged off Thursday’s upbeat US data. The upbeat market mood caps the XAU/USD ahead of the key US PCE Price Index.
Avalanche rallies following launch of incentive program for developers
Avalanche announced the launch of Retro9000 on Thursday as part of its larger Avalanche9000 upgrade. Retro9000 is a program designed to support developers with up to $40 million in grants for building on the Avalanche testnet.
RBA widely expected to keep key interest rate unchanged amid persisting price pressures
The Reserve Bank of Australia is likely to continue bucking the trend adopted by major central banks of the dovish policy pivot, opting to maintain the policy for the seventh consecutive meeting on Tuesday.
Five best Forex brokers in 2024
VERIFIED Choosing the best Forex broker in 2024 requires careful consideration of certain essential factors. With the wide array of options available, it is crucial to find a broker that aligns with your trading style, experience level, and financial goals.