- Australian Dollar snaps a winning streak despite a solid increase in new jobs in the country.
- Australia’s Employment Change increased to 55K in October; the Unemployment Rate rose by 3.7% as expected.
- US PPI unexpectedly declined by 0.5% compared to the expected increase of 0.1%.
- China’s House Price Index declined by 0.38% in October, indicating a worsening condition in the property sector.
The Australian Dollar (AUD) moves below the 0.6500 psychological level with a negative bias on Thursday after the release of the Australian Employment data. The 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. However, the majority of the jobs were part-time positions, which somewhat diminished the positive impact of the overall headline.
Australia’s Unemployment Rate came in at 3.7% in October as expected against the previous figure of 3.6%. However, the AUD/USD pair experienced volatility in the previous session after the economic data was released from the United States (US) on Wednesday.
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.
The four-hour talks between US President Joe Biden and Chinese President Xi Jinping have resulted in a commitment to stabilize strained bilateral ties and restore some military-to-military communications. This commitment signals an effort to address and improve the complex relationship between the two nations, potentially paving the way for better diplomatic and strategic cooperation in the future.
The reported comments from China’s President Xi Jinping, as conveyed by Xinhua, emphasize the hope for a partnership between China and the United States. The key points include a call for mutual respect, peaceful coexistence, and cooperation in various fields such as the economy, trade, agriculture, climate change, and artificial intelligence.
President Xi also 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.
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.
The report from the US Bureau of Labor Statistics indicated a more significant slowdown in US inflation than originally anticipated. This unexpected deceleration triggered a notable decline in the US Dollar (USD) value.
Adding to the economic landscape, US Retail Sales declined by 0.1% in October, defying expectations of a steeper slide of 0.3%. Investors' focus shifts to weekly Jobless Claims on Thursday.
Daily Digest Market Movers: Australian Dollar weakens amid mixed Aussie jobs data
- 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%.
- Australia’s Westpac Consumer Confidence declined by 2.6% in November, swinging from the previous growth of 2.9%.
- RBA Assistant Governor (Economic) Marion Kohler stated that the decline in inflation is expected to be slower than initially anticipated. This is attributed to the persistent high level of domestic demand and robust pressures from labor and other costs. Kohler emphasized the need for a tighter policy to address the challenges posed by elevated inflation.
- Economists at the National Australia Bank (NAB) anticipate another 25 basis points hike in February following the Q4 inflation data. Additionally, NAB believes rate cuts will unlikely commence until November 2024.
- 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%.
- 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.
- US Monthly Budget Statement reported a deficit of $67B in October, compared to the expected deficit of $65B.
Technical Analysis: Australian Dollar remains below the 0.6500 major level lined up with the 38.2% Fibonacci retracement
The Australian Dollar trades around the 0.6490 level on Thursday, in line with immediate resistance at the psychological level of 0.6500. The next resistance levels include the 38.2% Fibonacci retracement at 0.6508 and the 50% retracement at 0.6582. On the downside, the AUD/USD pair may find support at the 14-day Exponential Moving Average (EMA) at 0.6429, followed by the major support level at 0.6400.
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% | 0.29% | 0.17% | 0.65% | 0.03% | 0.81% | 0.15% | |
| EUR | -0.16% | 0.10% | 0.01% | 0.48% | -0.14% | 0.64% | -0.03% | |
| GBP | -0.27% | -0.10% | -0.08% | 0.39% | -0.24% | 0.58% | -0.15% | |
| CAD | -0.18% | 0.03% | 0.10% | 0.45% | -0.14% | 0.64% | -0.03% | |
| AUD | -0.66% | -0.49% | -0.38% | -0.48% | -0.63% | 0.15% | -0.52% | |
| JPY | -0.03% | 0.14% | 0.25% | 0.16% | 0.62% | 0.78% | 0.11% | |
| NZD | -0.83% | -0.65% | -0.55% | -0.63% | -0.18% | -0.80% | -0.69% | |
| CHF | -0.14% | 0.04% | 0.16% | 0.06% | 0.52% | -0.10% | 0.68% |
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
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.
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.
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.
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.
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.
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