Australian Dollar extends losses amid US Dollar rebounds, focus on US, Australia data
- Australian Dollar struggles as the US Dollar recovers recent losses.
- Australia’s central bank is expected to implement more interest rate hikes.
- Upbeat US Treasury yields contribute support for the Greenback.
The Australian Dollar (AUD) continues the losing streak for the fourth successive day on Monday. The AUD/USD pair faces challenges due to a rebound in US Dollar (USD) amid upbeat US Treasury yields.
Australia’s central bank is anticipated to implement more stringent monetary policies. Reserve Bank of Australia (RBA) Governor Michele Bullock has stated that should inflation persist above the projected levels, the RBA is prepared to enact suitable policy measures.
Australia's employment scenario is experiencing interesting shifts. In September, the Employment Change took an unexpectedly sharp decline, adding a surprising twist to the equation. On a positive note, the Unemployment Rate made a favorable move by dropping more than anticipated, deviating from the expected trend.
The US Dollar Index (DXY) bounces back to recover recent losses, potentially supported by strong economic data from the United States (US). However, the US Dollar (USD) encountered hurdles as US Treasury yields experienced a pullback on Friday.
Federal Reserve (Fed) Chairman Jerome Powell indicated on Thursday that the central bank is not planning to raise rates in the short term providing support for the pair. Powell added that additional tightening of monetary policy could be in order if there are further signs of growth or the labor market ceases to improve.
Daily Digest Market Movers: Australian Dollar looks to continue the losing streak on upbeat US Dollar
- Australia's Unemployment Rate for September surprised on the positive side, coming in at 3.6%. This outperformed expectations of 3.7% and matched the previous figure of 3.7%.
- Australian Employment Change for the same month was 6.7K, falling short of the consensus forecast of 20K. This is a notable decline from the 64.9K jobs added in August.
- Australia's central bank expresses 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.
- Atlanta Fed President Raphael Bostic expressed on Friday that he believes the US central bank is unlikely to lower interest rates before the middle of next year. Fed Philadelphia President Patrick Harker reiterated his inclination to maintain unchanged interest rates.
- Fed Cleveland President Loretta Mester indicated that the US central bank is "at or near the peak of the rate hike cycle." However, Mester acknowledged that the data released during the previous week could influence the central bank's decision regarding the future of monetary policy.
- US weekly Initial Jobless Claims declined to 198K, falling short of the market expectations of 212K for the week ending October 14, the lowest level since January.
- Existing Home Sales Change fell 2.0% MoM in September and Existing Home Sales improved to 3.96M.
- US Unemployment Rate improved to 3.6%, which was expected to remain consistent at 3.7% in September.
- Market fluctuations persist in the US bond market, as the 10-year Treasury yield stabilizes around 4.94%. Meanwhile, the 2-year yield has dipped to 5.09%.
- Market participants will closely monitor the US S&P Global PMI on Tuesday, the Q3 Gross Domestic Product (GDP) on Thursday, and the Core Personal Consumption Expenditures (PCE) on Friday. The attention will also be focused on the Australian S&P Global PMI and Consumer Price Index (CPI), along with RBA Governor Bullock's speech.
Technical Analysis: Australian Dollar maintains position above 0.6300 major level
The Australian Dollar trades lower around 0.6310 on Monday, aligning with notable support at the 0.6300 level. The further support level is indicated by the monthly low at 0.6285. Looking upward, a crucial resistance is identified around the 14-day Exponential Moving Average (EMA) at 0.6347, following a major level at 0.6400. A breakthrough above this level holds the potential to reach around the 23.6% Fibonacci retracement level at 0.6429.
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 | 0.05% | 0.04% | 0.05% | 0.12% | -0.02% | 0.06% | 0.07% |
| EUR | -0.05% | -0.01% | -0.01% | 0.07% | -0.07% | 0.01% | 0.03% |
| GBP | -0.03% | 0.00% | 0.01% | 0.12% | -0.05% | 0.02% | 0.06% |
| CAD | -0.04% | 0.01% | -0.01% | 0.12% | -0.05% | 0.01% | 0.04% |
| AUD | -0.13% | -0.05% | -0.06% | -0.08% | -0.12% | -0.07% | -0.04% |
| JPY | 0.02% | 0.05% | 0.02% | 0.05% | 0.10% | 0.05% | 0.10% |
| NZD | -0.05% | 0.00% | -0.01% | -0.01% | 0.07% | -0.06% | 0.03% |
| CHF | -0.08% | -0.03% | -0.04% | -0.04% | 0.04% | -0.10% | -0.03% |
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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