The Australian dollar falls as the Reserve Bank of Australia is unsure about further tightening policy. The National Australia Bank expects another 25 basis point increase in February. The Governor of the People’s Bank of China, Yi Gang, stated that the 5% growth target was successfully achieved. The Australian Dollar (AUD) moves below a key level, extending losses for the third day in a row following a dovish interest rate statement by the Reserve Bank of Australia (RBA). in addition to,
The AUD/USD pair is facing a challenge due to the rebound in the US dollar (USD). The Australian Central Bank is adopting a data-driven approach, especially as the Australian economy faces a slowdown. Consumer spending remained weak amid persistent inflation risks. Market participants are looking for more signals on whether the upcoming data will lead to an interest rate hike by the Reserve Bank of Australia (RBA).
The Reserve Bank of Australia raised the official cash rate (OCR) from 4.10% to a 12-year high of 4.35% on Tuesday, in line with widespread expectations. The move by the RBA appears to have been influenced by the recent Consumer Price Index (CPI) data, which revealed a notable 5.6% increase in the monthly Consumer Price Index (CPI).
National Australia Bank (NAB) expects another 25 basis point increase in February following Q4 inflation data. In addition, NAB believes that interest rate cuts are unlikely to begin until November 2024. Yi Gang, Governor of the People’s Bank of China (PBOC), expressed optimism in a statement issued on Wednesday, noting that the Chinese economy is on a positive path, We expect to successfully achieve the 5% growth target. In addition, the International Monetary Fund (IMF) revised its GDP growth forecast for China,
Australian retail sales improved to 0.2% in the third quarter
It now expects a growth rate of 5.4% in 2023, up from the initial forecast of 5.0%, and 4.6% in 2024, exceeding the initial forecast of 5.0%. The previous estimate was 4.2%. This development could provide support to the Australian Dollar (AUD), given Australia’s status as China’s largest trading partner.
The US Dollar Index (DXY) continues to post gains for the third day in a row as US Treasury yields recover recent losses recorded in the previous session, perhaps influenced by improving risk sentiment. This change in sentiment may be related to speculation regarding the possibility of the US Federal Reserve raising interest rates, especially in the wake of the downbeat non-farm payrolls data released last Friday.
Market movers in daily summary: The Australian dollar loses strength on the back of a dovish interest rate statement by the Reserve Bank of Australia The Reserve Bank of Australia resumed policy tightening, raising the official cash rate (OCR) from 4.10% to 4.35% after keeping the benchmark interest rate unchanged For four consecutive meetings. The Australian securities inflation rate (on an annual basis) fell to 5.1% in September from 5.7% previously.
Australian retail sales improved to 0.2% in the third quarter of -0.6%. China’s trade balance data for October revealed a decrease in the surplus balance at US$56.53 billion, versus market expectations of an improvement to US$81.95 billion from previous readings of US$77.71 billion. While exports (on an annual basis) saw a larger decline of 6.4%, more than the expected decline of 3.1% The US Bureau of Labor Statistics recently released non-farm payrolls (NFP) data for October, revealing a figure of 150,000. This figure missed expectations of 180,000 and represents a significant decline from 297,000 in September
What are the main factors that move the Australian dollar?
Average hourly earnings in the US (on a monthly basis) saw a decline to 0.2%, missing expectations of 0.3%. On an annual basis, it came in at 4.1%, beating expectations of 4.0%. The US ISM Services Purchasing Managers’ Index (PMI) fell from the previous 53.6 to 51.8. Additionally, the US Department of Labor on Thursday released the number of initial claims for unemployment benefits for the week ending October 27, showing an increase from 212,000 to 217,000.
The Australian dollar is hovering below 0.6450 in line with support at the nine-day EMA. The Australian dollar is trading at 0.6430 on Wednesday. The nine-day exponential moving average (EMA) at 0.6422 is emerging as major support followed by the psychological level at 0.6400. On the upside, AUD/USD may face a challenge around the immediate barrier area at key support at 0.6450. A strong breakout could support the pair to reach the 38.2% Fibonacci retracement level at 0.6508, followed by the September high at 0.6521.
The price of the Australian dollar today is the percentage change in the Australian dollar (AUD) against the major currencies listed today. The Australian dollar was the weakest against the New Zealand dollar. One of the most important factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a country rich in resources,
Another major driver is the price of its largest export, iron ore. The health of the Chinese economy, its largest trading partner, is one factor, as well as Australia’s inflation, growth rate and trade. balance. Market sentiment – whether investors are snapping up riskier assets (risk on) or looking for safe havens (risk off) – is also a factor, with risk appetite positive for the Australian dollar.
How do RBA decisions affect the Australian dollar?
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 affects the level of interest rates in the economy as a whole. The RBA’s main objective 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 Australian dollar, and relatively low interest rates. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former being AUD negative and the latter AUD positive.
health of the Chinese economy affects the Australian dollar China is Australia’s largest trading partner, so the health of Chinese economy has a significant impact on value of the Australian dollar (AUD). When the Chinese economy is performing well, it buys more raw materials, goods and services from Australia, which raises demand for the Australian dollar, raising its value. opposite is the case when Chinese economy does not grow as quickly as expected. Therefore, positive or negative surprises in Chinese growth data often have a direct impact on Australian dollar and its crosses.
How does the price of iron ore affect the Australian dollar? Iron ore is Australia’s largest export, representing $118 billion annually according to 2021 data, and China is its main destination. Therefore, the price of iron ore could be a driver of the Australian dollar. In general, if the price of iron ore rises, the Australian dollar also rises, as overall demand for the currency increases. The opposite is the case if the price of iron ore falls. Higher iron ore prices also tend to increase the likelihood of a positive trade balance for Australia, which is also positive for the Australian dollar.
