- Australian Dollar continues to lose ground as the US Dollar surges.
- RBA is expected to increase interest rates; which could limit the losses of the AUD.
- US Dollar received upward support from improved US Treasury yields.
The Australian Dollar (AUD) extends losses for the second session, trading around all-time lows against the US Dollar (USD) on Thursday. The AUD/USD pair faces a challenge on the upbeat Greenback, which could be attributed to the improved US Treasury yields.
Australia’s inflation data introduced the prospect of a 25 basis points rate hike by the Reserve Bank of Australia (RBA) during its November meeting. Bureau of Statistics (ABS) unveiled on Wednesday that the Consumer Price Index (CPI) experienced an upswing in the third quarter of 2023.
RBA Governor Michele Bullock shared on Thursday that the CPI had a slight uptick, a tad beyond predictions, yet comfortably in the anticipated range. Bullock emphasized the central bank’s balancing act—aiming to ease the economy’s pace without stumbling into the recession’s embrace.
The US Dollar Index (DXY) continues the winning streak on the back of the upbeat US Treasury yields, coupled with the more robust preliminary S&P Global PMI figures from the United States released on Tuesday.
Moreover, geopolitical uncertainties are poised to sustain the influx of safe-haven investments. Israel Prime Minister Benjamin Netanyahu announced the readiness for a ground assault in Gaza, with the timing of the invasion to be determined through consensus.
Daily Digest Market Movers: Australian Dollar loses ground despite the possibility of another rate hike by the RBA
- Australia’s Consumer Price Index (CPI) reached 1.2% in the third quarter of 2023, surpassing the 0.8% uptick in the previous quarter and the market consensus of 1.1% in the same period.
- Australia’s S&P Global Composite PMI took a downturn in October, slipping to 47.3 from the prior reading of 51.5. The Manufacturing PMI experienced a slight easing to 48.0 compared to the previous figure of 48.7, and the Services PMI regressed into contraction territory, dropping to 47.6 from the previous month’s reading of 51.8.
- Australia’s RBA expressed heightened concern about the inflation impact stemming from supply shocks. Governor of the Reserve Bank of Australia, Michele Bullock stated that if inflation persists above projections, the RBA will take responsive policy measures. There is an observable deceleration in demand, and per capita consumption is on the decline.
- China is gearing up to host a pivotal financial policy meeting early next week, occurring once every five years. The overarching goals of this gathering include the proactive tackling and mitigation of risks and the formulation of medium-term priorities for the extensive $61 trillion financial industry.
- US Treasury Department officially confirmed on Tuesday that the first meeting of the economic working group between the United States and China took place. This working group serves as a platform for discussing bilateral economic policy matters.
- US S&P Global Composite PMI reported an increase in October, reaching 51.0 from 50.2. The Services PMI experienced growth, reaching 50.9, while the Manufacturing PMI rose to 50.0.
- Investors will likely focus on the US Q3 Gross Domestic Product (GDP) on Thursday. The US Core Personal Consumption Expenditures (PCE) and Australia’s Producer Price Index (PPI) will be eyed on Friday.
Technical Analysis: Australian Dollar hovers below the major resistance at 0.6300 on an upbeat US Dollar
The Australian Dollar trades around 0.6280 on Thursday near a yearly low, followed by the key support around the 0.6250 major level. On the upside, the 0.6300 major level emerges as the immediate resistance. A breakthrough above this resistance can reach around the 21-day Exponential Moving Average (EMA) at 0.6352 following the 23.6% Fibonacci retracement level at 0.6421.
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 US Dollar.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | 0.17% | 0.14% | 0.05% | 0.29% | 0.19% | 0.22% | 0.09% | |
| EUR | -0.17% | -0.04% | -0.13% | 0.12% | 0.01% | 0.05% | -0.06% | |
| GBP | -0.14% | 0.05% | -0.08% | 0.16% | 0.06% | 0.09% | -0.03% | |
| CAD | -0.05% | 0.12% | 0.08% | 0.24% | 0.15% | 0.18% | 0.07% | |
| AUD | -0.29% | -0.11% | -0.15% | -0.24% | -0.10% | -0.07% | -0.17% | |
| JPY | -0.20% | 0.00% | -0.07% | -0.13% | 0.08% | -0.01% | -0.07% | |
| NZD | -0.22% | -0.05% | -0.08% | -0.18% | 0.06% | -0.03% | -0.11% | |
| CHF | -0.13% | 0.04% | 0.00% | -0.07% | 0.16% | 0.07% | 0.10% |
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
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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