- The Australian Dollar receives support from RBA Governor Michele Bullock’s hawkish comments.
- The AUD may struggle as the United States could introduce more AI chip sanctions against China on Monday.
- The US dollar could regain its ground as the Fed remains cautious about cutting rates following recent robust inflation data.
The Australian Dollar (AUD) extends its winning streak for the third consecutive session on Friday following hawkish comments from Reserve Bank of Australia (RBA) Governor Michele Bullock. However, the AUD/USD pair could face downward pressure as the United States (US) is set to unveil additional measures on Monday aimed at curbing China’s ability to advance artificial intelligence technology.
RBA Governor Bullock declared on Thursday that Australia’s core inflation remains “too high” to contemplate interest rate cuts in the near future. He emphasized that there is still progress to be made before inflation sustainably returns to the target level, according to Bloomberg.
The downside to the US Dollar (USD) may be limited as the Federal Reserve (Fed) is expected to remain cautious about cutting interest rates following robust inflation data released on Wednesday. The report revealed strong consumer spending growth in October, but also indicated little progress in reducing inflation, prompting the Fed to remain vigilant.
Australian Dollar gets support from hawkish RBA Governor Bullock
- Australian Private Sector Credit rose 0.6% month-on-month in October, beating market expectations of 0.5%, which had been the rate for the past three months. This represents the strongest monthly growth since June. In annual terms, credit increased by 6.1%, compared to the previous increase of 5.8%.
- On Thursday, Australia’s total new capital spending rose 1.1% quarter-on-quarter in the third quarter, beating market expectations for a 0.9% rise and recovering from a 2.2% drop in the previous quarter .
- The US Personal Consumption Expenditure (PCE) Price Index rose 2.3% year-on-year in October, up from 2.1% in September. Meanwhile, the core PCE Price Index, which excludes volatile food and energy prices, rose 2.8%, slightly higher than the 2.7% recorded the previous month. Both figures were in line with market expectations, indicating continued inflationary pressure within the economy.
- The latest Federal Open Market Committee (FOMC) meeting minutes for the policy meeting held on November 7 indicated that policymakers are taking a cautious stance on cutting interest rates, citing slowing inflation and a robust labor market.
- Bloomberg reported that US President-elect Donald Trump is expected to nominate Jamieson Greer as the US Trade Representative on Tuesday. Greer’s nomination highlights the central role of tariffs in Trump’s economic strategy.
- The Australian dollar faced challenges due to depressed market sentiment following President-elect Donald Trump’s announcement of a 10% increase in tariffs on all Chinese goods entering the United States.
- Chicago Fed President Austan Goolsbee indicated Tuesday that the Fed will likely continue lowering interest rates toward a neutral stance that neither stimulates nor restricts economic activity. Meanwhile, according to Bloomberg, Minneapolis Fed President Neel Kashkari stressed that it remains appropriate to consider another rate cut at the Fed’s December meeting.
Technical Analysis: Australian Dollar around 0.6500, nine-day EMA
The AUD/USD pair is trading near 0.6500 on Friday, with bearish momentum strengthening based on technical analysis. The pair remains within a descending channel, and the 14-day Relative Strength Index (RSI) remains below 50, signaling persistent negative sentiment.
On the downside, the AUD/USD pair could return to its four-month low of 0.6434, marked on November 26. A break of this level could pave the way towards the yearly low of 0.6348, last reached on August 5. Additional support is found near the lower boundary of the descending channel around 0.6300.
Immediate resistance lies at the nine-day exponential moving average (EMA) at 0.6502, followed by the 14-day EMA at 0.6513. Additional resistance is positioned near the upper boundary of the channel at 0.6530. A clear break above these levels could set the stage for a move towards the four-week high of 0.6687.
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 | -0.05% | -0.12% | -1.00% | -0.11% | -0.11% | -0.25% | -0.21% | |
| EUR | 0.05% | -0.07% | -0.97% | -0.05% | -0.05% | -0.20% | -0.16% | |
| GBP | 0.12% | 0.07% | -0.93% | 0.02% | 0.01% | -0.13% | -0.09% | |
| JPY | 1.00% | 0.97% | 0.93% | 0.92% | 0.90% | 0.75% | 0.80% | |
| CAD | 0.11% | 0.05% | -0.02% | -0.92% | -0.01% | -0.14% | -0.10% | |
| AUD | 0.11% | 0.05% | -0.01% | -0.90% | 0.01% | -0.14% | -0.09% | |
| NZD | 0.25% | 0.20% | 0.13% | -0.75% | 0.14% | 0.14% | 0.04% | |
| CHF | 0.21% | 0.16% | 0.09% | -0.80% | 0.10% | 0.09% | -0.04% |
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.
