Australian Dollar (AUD) continues to fall for the second consecutive session, remaining close to an important level on Wednesday. AUD/USD
both of them are under pressure as a result of being suppressed. economic data
As the Federal Open Market Committee (FOMC) gets ready to announce its policy decision, the Australian currency is being impacted along with the strengthening of the US Dollar (USD).
The economic data for Australia that was released on Wednesday showed a decline, including the AiG Industry Index and Building Permits for September. Despite this, the Australian Dollar was boosted on Monday by strong Retail Sales, which surpassed expectations with a higher reading for September.
The Reserve Bank of Australia (RBA) is expected to announce its policy decision on November 7. There are expectations that there will be a 0.25% increase in interest rates at the next meeting due to rising inflation.
The most recent Wednesday data shows that the Caixin Manufacturing Purchasing Managers’ Index (PMI) in China unexpectedly decreased in October. This negative result for Chinese manufacturing puts extra stress on the Australian Dollar.
The International Monetary Fund (IMF) highlighted the strength of Australia’s economy in its annual assessment, despite facing persistent inflation. The IMF suggests that the Reserve Bank of Australia (RBA) should contemplate implementing additional measures to control inflation. Although Australia’s economy is currently facing a slowdown after a strong recovery from the pandemic, it still exhibits signs of resilience.
The US Dollar Index
DXY is experiencing a consecutive increase for the second day, driven by the rise in US Treasury yields. This is happening as the market prepares for the forthcoming decision on monetary policy by the US Federal Reserve. Although predictions indicate that the central bank will probably maintain its current stance on monetary policy during the Wednesday meeting, the overall context remains uncertain. outlook
December’s gathering depends on data-driven evaluations.
Investors are prepared to carefully observe the post-meeting communication from the Federal Open Market Committee (FOMC) in order to find valuable hints about the direction in which interest rates may be moving.
The Australian Dollar is experiencing a decline in value due to weak economic data prior to the Federal Reserve’s policy announcement.
- In September, Australia’s AiG Industry Index dropped to -9.9 from the earlier -3.5 reading. Additionally, the Building Permits (MoM) also decreased by 4.6%, contradicting the market’s expectation of a 1.3% increase, and reversing the previous growth rate of 7.0%.
- Australia experienced a significant increase in its Retail Sales (Month-on-Month) in September, reaching a remarkable 0.9%. This surpassed both market predictions of 0.3% and the previous recorded figure of 0.2%.
- In the third quarter of 2023, the Consumer Price Index (CPI) in Australia increased to 1.2%, surpassing both the 0.8% rise in the previous quarter and the expected market consensus of 1.1% for that time period.
- The Reserve Bank of Australia expressed increased worry about the inflation effects caused by supply shocks. Michele Bullock, the Governor of the Reserve Bank of Australia, stated that if inflation continues to exceed expectations, the RBA will implement appropriate policy actions. There is a noticeable slowdown in demand, and individual consumption is decreasing.
- The most recent data, released on Wednesday, shows that the Caixin Manufacturing Purchasing Managers’ Index (PMI) in China dropped to 49.5 in October. This is in contrast to September’s expansion, which was measured at 50.6.
- The recent release of the Chinese Purchasing Managers’ Index (PMI) data has raised concerns regarding the slow economic condition of the second-largest economy in the world. Given that Australia is China’s top trading ally, there is an increased likelihood of this situation impacting the value of the Australian Dollar.
- China’s National Bureau of Statistics (NBS) Manufacturing Purchasing Managers’ Index (PMI) experienced an unforeseen change in September as it declined to 49.5, after an expansion of 50.2 in July, thereby failing to meet market expectations of 50.2.
- The NBS Services PMI for China also saw a decrease, falling to 50.6 in September, which was lower than the expected value of 51.8 and the previous reading of 51.7.
- Reports indicate that there is a preliminary understanding between the United States and China for a planned encounter in November, where Presidents Joe Biden and Xi Jinping would meet. This development follows several months of deliberate diplomatic initiatives aimed at repairing the two nations’ relationship.
- The annual US Core Personal Consumption Expenditures Price Index experienced a small decrease to 3.7% from the previous reading of 3.8%. However, the monthly index exhibited a rise to 0.3%, which was expected and higher than the previous reading of 0.1%.
- In October, the University of Michigan Consumer Index performed better than anticipated with a reading of 63.8, exceeding the predicted value of 63.0.
- Before the Federal Reserve makes its policy decision on Wednesday, investors will pay close attention to important measures like the US ADP Employment Change and ISM Manufacturing PMI for October. They anticipate that the interest rates will remain unchanged at 5.5%.
The technical analysis indicates that the Australian Dollar is staying just below the important psychological level of 0.6350.
The Australian Dollar is currently consolidating below the important level of 0.6350. The annual low at 0.6270 could act as a significant support, especially in conjunction with the major level of 0.6250. On the other hand, if the currency surpasses the resistance at the 50-day Exponential Moving Average (EMA) of 0.6400, it could potentially move towards the 23.6% Fibonacci retracement level at 0.6419.
Australian Dollar price today
The information presented in the table demonstrates the fluctuation of the Australian Dollar (AUD) in comparison to various prominent currencies on the current day. Among these, the Australian Dollar experienced the most notable decline against the New Zealand Dollar.
USD EUR GBP CAD AUD JPY NZD CHF USD 0.18%0.01%0.01%0.05%0.04%-0.11%-0.09% EUR -0.19%-0.17%-0.15%-0.15%-0.14%-0.30%-0.27% GBP -0.01%0.18%0.02%0.03%0.03%-0.13%-0.09% CAD -0.02%0.17%0.00%0.03%0.04%-0.11%-0.09% AUD -0.05%0.14%-0.03%-0.03%0.00%-0.15%-0.11% JPY -0.05%0.15%-0.03%-0.01%0.00%-0.16%-0.13% NZD 0.10%0.30%0.12%0.14%0.15%0.15%0.03% CHF 0.09%0.27%0.10%0.10%0.13%0.14%-0.02%
The heat map displays the percentage changes between different major currencies. The left column represents the base currency selection, while the top row represents the quote currency selection. To illustrate, choosing the Euro from the left column and following the horizontal line to the Japanese Yen displays the percentage change in the box as EUR (base)/JPY (quote).
Australian Dollar FAQs
What are the main factors that influence the Australian Dollar?
The level of interest rates set by the Reserve Bank of Australia (RBA) is one of the most important factors affecting the Australian Dollar (AUD). Another significant driver is the price of Iron Ore, Australia’s primary export as a resource-rich country. The health of the Chinese economy, Australia’s largest trading partner, also plays a role, along with inflation in Australia, its growth rate, and the Trade Balance. Additionally, market sentiment, which determines whether investors are more inclined to take on risky assets (risk-on) or seek safe-havens (risk-off), is a factor that can impact the AUD, with a risk-on sentiment having a positive effect.
What is the effect of the decisions made by the Reserve Bank of Australia on the Australian Dollar?
The Australian Dollar (AUD) is affected by the Reserve Bank of Australia (RBA) through its control over interest rates for Australian banks. This control extends to the overall interest rates in the economy. The primary objective of the RBA is to keep inflation stable at a rate of 2–3% by adjusting interest rates accordingly. When interest rates are comparatively high compared to other significant central banks, it bolsters the AUD, whereas if they are relatively low, it weakens the currency. Additionally, the RBA can also utilize quantitative easing and tightening to impact credit conditions. The former has a negative impact on the AUD, while the latter has a positive effect on the currency.
What is the connection between the Chinese Economy’s health and the value of the Australian Dollar?
China is the biggest trading partner for Australia, which means that the strength of the Chinese economy greatly affects the value of the Australian Dollar (AUD). When the Chinese economy is performing well, it buys more natural resources, products, and services from Australia, increasing the demand for the AUD and causing its value to rise. Conversely, when the Chinese economy is not growing as anticipated, the opposite occurs. Unexpected positive or negative changes in Chinese economic data frequently have a direct influence on the Australian Dollar and its relationship with other currencies.
What kind of influence does the price of Iron Ore have on the Australian Dollar?
Australia’s biggest export is Iron Ore and it brings in an annual revenue of $118 billion, based on information from 2021, with China being its main customer. Consequently, the price of Iron Ore can influence the value of the Australian Dollar. Typically, when the Iron Ore price increases, the Australian Dollar also strengthens due to heightened demand for the currency. Conversely, if the price of Iron Ore decreases, the Australian Dollar weakens. In addition, higher Iron Ore prices often lead to a higher chance of a positive Trade Balance for Australia, which is beneficial for the Australian Dollar as well.
What is the effect of the Trade Balance on the value of the Australian Dollar?
The value of the Australian Dollar can be affected by the Trade Balance, which represents the disparity between a country’s export earnings and import expenses. If Australia’s exports are in high demand, the Australian Dollar’s value will increase due to the surplus demand from foreign buyers wanting to buy its exports compared to its spending on imports. In contrast, a negative Trade Balance weakens the Australian Dollar.
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