- The Australian Dollar appreciated as the TD-MI Inflation Index rose 0.3% month-on-month in October, compared to a previous increase of 0.1%.
- The Reserve Bank of Australia is widely expected to keep the cash rate at 4.35% on Tuesday.
- The US dollar could receive support from safe-haven flows amid uncertainty surrounding the results of the US presidential election on November 5.
The Australian Dollar (AUD) strengthens following the release of Melbourne Institute Inflation Index data on Monday. The Reserve Bank of Australia (RBA) is expected to keep the cash rate at 4.35% during Tuesday’s policy meeting as core inflation, reflected in the trimmed mean, remains high. This anticipated hawkish stance from the RBA continues to support the Australian Dollar, strengthening the AUD/USD pair.
The TD-MI Inflation Index rose 0.3% month-on-month in October, up from 0.1% the previous month, marking the highest reading since July and preceding the RBA’s November monetary policy meeting. On a yearly basis, the index rose 3.0%, compared to the previous reading of 2.6%.
The US Dollar (USD) weakens following the release of weaker-than-expected US October Non-Farm Payrolls (NFP) data on Friday. However, uncertainty surrounding the outcome of the US presidential election on November 5 could trigger safe haven flows, which could support the Dollar.
Traders are also focused on the US Federal Reserve’s (Fed) upcoming monetary policy decision, with expectations of a modest 25 basis point rate cut this week. The CME’s FedWatch tool currently indicates a 99.6% probability of a quarter-point cut by the Fed in November.
Daily Market Summary: Australian Dollar Rises Following Key Domestic Data Release
- ANZ Australia job ads rose 0.3% month-on-month in October, a notable slowdown from the upwardly revised 2.3% increase in September. Despite the weaker growth, this marks the second consecutive month of increases.
- On Sunday, Chinese Trade Minister Wang Wentao met with Australian Trade Minister Don Farrell. China expressed hopes that Australia will continue to improve its business environment and ensure fair and equitable treatment for Chinese companies.
- The latest New York Times/Siena College poll, reported by Reuters, shows Vice President Kamala Harris with slight leads in Nevada, North Carolina and Wisconsin, while former President Donald Trump has a slight lead in Arizona. The candidates are in close races in Michigan, Georgia and Pennsylvania. The survey, conducted from Oct. 24 to Nov. 2, indicated that all matchups in seven key states are within a 3.5% margin of error.
- The US Bureau of Labor Statistics (BLS) indicated that October Nonfarm Payrolls increased by only 12,000, following a revised September increase of 223,000 (up from 254,000), which fell well short of expectations. market of 113,000. Meanwhile, the unemployment rate held steady at 4.1% in October, matching the consensus forecast.
- The Australian Producer Price Index rose 0.9% quarter-on-quarter in the third quarter, following a 1.0% increase in the previous period and beating market forecasts for a 0.7% increase. This marks the 17th consecutive period of producer inflation. On an annual basis, PPI growth slowed to 3.9% in the third quarter, down from a 4.8% increase in the previous quarter.
- China’s Caixin Manufacturing Purchasing Managers’ Index (PMI) rose to 50.3 in October, up from 49.3 in September, beating market expectations of 49.7. As China is a key trading partner for Australia, changes in the Chinese economy could significantly influence Australian markets.
- The US Personal Consumption Expenditure (PCE) Price Index indicated that core inflation rose 2.7% year-on-year in September. Additionally, initial jobless claims fell to a five-month low of 216,000 for the week ending Oct. 25, signaling a resilient labor market and dampening expectations of imminent rate cuts by the Federal Reserve. (Fed).
- Australia’s seasonally adjusted retail sales rose 0.1% month-on-month in September, falling short of the 0.3% expected and significantly below the 0.7% growth seen in the previous month. On a quarterly basis, retail sales rose 0.5% in the third quarter, recovering from a 0.3% decline in the previous quarter.
Technical Analysis: Australian Dollar tests 0.6600, nine-day EMA
AUD/USD is trading near 0.6600 on Monday. The daily chart signals a possible weakening of the bearish bias as the pair tests the nine-day exponential moving average (EMA). However, the 14-day Relative Strength Index (RSI) remains below the 50 level; an increase above 50 would reflect a change in momentum from bearish to bullish.
As for resistance, AUD/USD faces the nine-day EMA at 0.6602, with the next resistance at the 14-day EMA at 0.6625. A break above these levels could strengthen the pair, potentially targeting the psychological level of 0.6700.
In terms of support, AUD/USD could find immediate support at the three-month low of 0.6536. A break below this level could push the pair towards the key psychological level of 0.6500.
AUD/USD: Daily Chart
Australian Dollar PRICE Today
The table below shows the percentage change of the Australian Dollar (AUD) against major currencies today. Australian dollar was the strongest currency against the US dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.54% | -0.46% | -0.23% | -0.13% | -0.67% | -0.29% | -0.30% | |
| EUR | 0.54% | 0.04% | -0.10% | 0.00% | 0.17% | -0.16% | -0.16% | |
| GBP | 0.46% | -0.04% | -0.39% | -0.03% | 0.14% | -0.19% | -0.20% | |
| JPY | 0.23% | 0.10% | 0.39% | 0.09% | 0.10% | 0.13% | 0.22% | |
| CAD | 0.13% | -0.01% | 0.03% | -0.09% | -0.33% | -0.18% | -0.17% | |
| AUD | 0.67% | -0.17% | -0.14% | -0.10% | 0.33% | -0.33% | -0.33% | |
| NZD | 0.29% | 0.16% | 0.19% | -0.13% | 0.18% | 0.33% | -0.01% | |
| CHF | 0.30% | 0.16% | 0.20% | -0.22% | 0.17% | 0.33% | 0.00% |
The heat map shows percentage changes for major currencies. The base currency is selected from the left column, while the quote currency is selected from the top row. For example, if you choose the Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change shown in the box will represent AUD (base)/USD (quote).
The Australian Dollar FAQs
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). As Australia is a resource-rich country, another key factor is the price of its largest export, iron ore. The health of the Chinese economy, its largest trading partner, is a factor, as is inflation in Australia, its growth rate and the Balance of Trade. Market sentiment, that is, whether investors bet on riskier assets (risk-on) or seek safe havens (risk-off), is also a factor, with the risk-on being positive for the AUD.
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 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 AUD, and the opposite for relatively low ones. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former being negative for the AUD and the latter being positive for the AUD.
China is Australia’s largest trading partner, so the health of the Chinese economy greatly influences the value of the Australian Dollar (AUD). When the Chinese economy is doing well, it buys more raw materials, goods and services from Australia, which increases demand for the AUD and drives up its value. The opposite occurs when the Chinese economy does not grow as fast as expected. Therefore, positive or negative surprises in Chinese growth data usually have a direct impact on the Australian Dollar.
Iron ore is Australia’s largest export, with $118 billion a year according to 2021 data, with China being its main destination. The iron ore price, therefore, may be a driver of the Australian dollar. Typically, if the price of iron ore rises, the AUD also rises as aggregate demand for the currency increases. The opposite occurs when the price of iron ore falls. Higher iron ore prices also tend to result in a higher likelihood of a positive trade balance for Australia, which is also positive for the AUD.
The trade balance, which is the difference between what a country earns from its exports and 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, its currency will gain value solely from the excess demand created by foreign buyers wanting to purchase its exports versus what it spends on purchasing imports. Therefore, a positive net trade balance strengthens the AUD, with the opposite effect if the trade balance is negative.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
