- Australian Dollar retraces its losses on risk-on sentiment.
- Australian job advertisements improved by 0.1% in December from the 4.6% prior.
- PBoC former director Sheng Songchen stated that China’s property downturn might persist for another two years.
- US Dollar remains steady despite downbeat US bond yields.
The Australian Dollar (AUD) attempts to recover its losses on Monday after a decline in the previous two sessions. The Australian Dollar gains ground on a softer US Dollar (USD) amid subdued US Treasury yields. The market is anticipated to be relatively quiet regarding US economic data due to the observance of Martin Luther King Jr. Day on Monday.
Australia’s currency experienced upward support due to heightened market speculation about potential rate cuts by the US Federal Reserve (Fed) in March. This speculation gained momentum, especially after Barclays revised its forecast on Friday for the first Federal Reserve (Fed) rate cut, moving it up to March from June. In a note released on Friday, Barclays analysts expressed their expectation for the Federal Open Market Committee (FOMC) to reduce the Fed Funds rate by 25 basis points at the March meeting.
Australia's job advertisements released by the Australia and New Zealand Banking Group Limited (ANZ) showed an improvement of 0.1% in December, swinging from the previous decline of 4.6%. Market participants are expected to closely observe the Westpac Consumer Confidence for January and the TD Securities Inflation for December, both scheduled for release on Tuesday. The focus will be shifted toward Consumer Inflation Expectations and labor market data on Thursday.
The People’s Bank of China's (PBoC) former director Sheng Songchen stated at a forum in Shanghai on Saturday that the property downturn in China might persist for an additional two years before stabilizing, according to Bloomberg. He anticipates that new-home sales nationwide will likely decrease by another 50 million square meters in 2024 and 2025. The annual total for 2025 is expected to plateau around 850 million square meters.
The US Dollar Index (DXY) continues to gain ground for the third successive session. However, the softer Producer Price Index (PPI) data from the United States (US) on Friday might have contributed downward for the US Dollar. US Retail Sales data will be eyed on Wednesday.
Daily Digest Market Movers: Australian Dollar experiences gains on a risk-on mood
- Australia's trade surplus increased to 11,437M MoM in December, surpassing the market expectation of 7,500M and exceeding the previous reading of 7,129M.
- Australian Monthly Consumer Price Index (YoY) for November showed a slight reduction to 4.3%, falling slightly short of the market expectation of 4.4% from the previous figure of 4.9%.
- Chinese Consumer Price Index (YoY) decreased by 0.3% in December, against the expected 0.4% decline. The monthly Consumer Price Index eased at 0.1%, compared to the market expectation of 0.2%. The yearly Producer Price Index fell by 2.7%, slightly exceeding the expected decline of 2.6%.
- Chinese Trade Balance in USD increased to $75.34B from the previous $68.39B, surpassing the expected $74.75B. The Exports (YoY) figure grew by 2.3%, exceeding the market consensus of 1.7%. The yearly Imports in CNY increased by 1.6%, compared to the previous 0.6%.
- US Bureau of Labor Statistics reported that the December Producer Price Index (PPI) figure was 1.0% year-on-year, compared to the previous reading of 0.8%. The Core PPI YoY arrived at 1.8%, down from 2.0% in November. Monthly, the headline and Core PPI indices remained flat at -0.1% and 0.0%, respectively.
- US Bureau of Labor Statistics reported that the Consumer Price Index (CPI) surged to 3.4% YoY in December, exceeding both November's 3.1% and the anticipated market figure of 3.2%. The monthly CPI growth for December showed a 0.3% increase, surpassing the market analysts' estimated projection of 0.2%. The annual Core CPI stood at 3.9%, a slight decrease from November's 4.0%, while the monthly figure remained steady at 0.3%, in line with expectations.
Technical Analysis: Australian Dollar consolidates near 0.6700 psychological level
The Australian Dollar trades near 0.6690 on Monday, positioned below the psychological barrier at 0.6700 followed by the 14-day Exponential Moving Average (EMA) at 0.6721. A potential breakthrough above the EMA might propel the AUD/USD pair toward the key resistance at 0.6750. On the downside, crucial support lies at 0.6650, in conjunction with the 38.2% Fibonacci retracement level, situated at 0.6637.
AUD/USD: Daily Chart
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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 New Zealand Dollar.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | -0.04% | 0.00% | -0.03% | 0.03% | -0.03% | 0.06% | 0.01% | |
| EUR | 0.06% | 0.03% | -0.01% | 0.06% | 0.01% | 0.10% | 0.05% | |
| GBP | -0.01% | -0.03% | -0.04% | 0.02% | -0.02% | 0.07% | 0.02% | |
| CAD | 0.05% | 0.00% | 0.05% | 0.06% | 0.00% | 0.10% | 0.06% | |
| AUD | -0.03% | -0.06% | 0.00% | -0.05% | -0.03% | 0.05% | 0.01% | |
| JPY | 0.04% | -0.04% | -0.11% | -0.01% | 0.06% | 0.09% | 0.04% | |
| NZD | -0.06% | -0.13% | -0.07% | -0.11% | -0.05% | -0.09% | -0.05% | |
| CHF | 0.00% | -0.06% | -0.02% | -0.06% | 0.01% | -0.05% | 0.04% |
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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