• Australian Dollar drops as RBA is not certain of further policy tightening.
• National Australia Bank forecasts another 25 basis points hike in February.
• PBOC Governor Yi Gang mentioned achieving the 5% growth target successfully.

The Australian Dollar (AUD) moves below a major level, extending the losses for the third successive day following the dovish rate statement by the Reserve Bank of Australia (RBA). Additionally, the AUD/USD pair faces a challenge due to the rebound in US Dollar (USD).

Australia's central bank adopts a data-dependent approach, particularly as the Australian economy faces a slowdown. Consumer spending has remained subdued amid persistent inflation risks. Market participants seek more cues on whether forthcoming data will prompt additional rate hikes by the Reserve Bank of Australia (RBA).

RBA raised the Official Cash Rate (OCR) from 4.10% to a 12-year high of 4.35% on Tuesday, aligning with widespread expectations. This move by the RBA appears to be influenced by recent Consumer Price Index (CPI) data, which disclosed a notable 5.6% increase in the monthly Consumer Price Index (CPI).

National Australia Bank (NAB) anticipates 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.

Yi Gang, the Governor of the People's Bank of China (PBOC), expressed optimism in a statement on Wednesday, stating that China's economy is on a positive trajectory, and we anticipate achieving 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%. This development could offer support to the Aussie Dollar (AUD), given Australia's position as China's largest trading partner.

US Dollar Index (DXY) continues to gain grounds for the third successive day as US Treasury yields retrace the recent losses registered in the previous session, possibly influenced by an improved risk sentiment. This change in sentiment might be linked to speculation regarding the possibility of the US Federal Reserve (Fed) concluding interest rate hikes, particularly in the wake of the downbeat Non-Farm Payrolls data released last Friday.

Daily Digest Market Movers: Australian Dollar loses ground on dovish rate statement by RBA

• 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) reduced to 5.1% in September from 5.7% prior.
• Australia’s Retail Sales improved to 0.2% in the third quarter from the previous reading of -0.6%.
• China's Trade Balance data for October revealed a decrease in the surplus balance at $56.53B against the market expectations of an improvement to $81.95B from the previous readings of $77.71B. While Exports (YoY) experienced a more significant decline of 6.4%, more than the expected decline of 3.1%.
• US Bureau of Labor Statistics recently unveiled the Non-Farm Payrolls (NFP) data for October, disclosing a figure of 150K. This missed the expected 180K and marked a substantial drop from September's 297K.
• US Average Hourly Earnings (Month-on-Month) saw a decline to 0.2%, deviating from the anticipated 0.3%. On a year-over-year basis, it came in at 4.1%, surpassing the 4.0% expectations.
• US ISM Services Purchasing Managers' Index (PMI) declined from the previous 53.6 to 51.8. Additionally, on Thursday, the US Department of Labor released the count of initial claims for unemployment benefits for the week ending October 27, showing an increase from 212,000 to 217,000.

Technical Analysis: Australian Dollar hovers below the 0.6450 aligned with the support at the nine-day EMA

The Australian Dollar trades lower around 0.6430 on Wednesday. The nine-day Exponential Moving Average (EMA) at 0.6422 emerges as the key support followed by the psychological level at 0.6400. On the upside, the AUD/USD pair could face a challenge around the immediate barrier region at major support at 0.6450. A firm break could support the pair to reach the 38.2% Fibonacci retracement level at 0.6508, followed by September’s high at 0.6521