- Australian Dollar remains below 0.6500 despite a solid increase in new jobs in the country.
- Australia’s Employment Change increased to 55K in October; the Unemployment Rate rose by 3.7% as expected.
- US PPI unexpectedly declined by 0.5% compared to the expected increase of 0.1%.
- China’s House Price Index declined by 0.38% in October, indicating a worsening condition in the property sector.
The Australian Dollar (AUD) floats below the 0.6500 psychological level with a negative bias on Thursday despite the stronger Australian Employment Change. The seasonally adjusted data reported an increase of 55K in October, compared with the market anticipation of 20K and 6.7K in the previous month.
Australia’s Unemployment Rate came in at 3.7% in October as expected against the previous figure of 3.6%. However, the AUD/USD pair experienced volatility in the previous session after the economic data was released from the United States (US) on Wednesday.
US Producer Price Index (PPI) took an unexpected turn in October, declining by 0.5% against the anticipated 0.1% increase. The annual rate also witnessed a drop from 2.2% to 1.3%. These figures align with the softer inflation indicated by Tuesday’s US Consumer Price Index (CPI) data.
The report from the US Bureau of Labor Statistics indicated a more significant slowdown in US inflation than originally anticipated. This unexpected deceleration triggered a notable decline in the US Dollar (USD) value.
Adding to the economic landscape, US Retail Sales declined by 0.1% in October, defying expectations of a steeper slide of 0.3%. Investors’ focus shifts to weekly Jobless Claims on Thursday.
China’s House Price Index declined by 0.38% in October compared to the previous decline of 0.1%, indicating a worsening condition in the country’s property sector.
Daily Digest Market Movers: Australian Dollar weakens amid mixed Aussie jobs data
- Australia’s Wage Price Index grew 1.3% as expected compared to the previous reading of 0.8%. The year-over-year data showed an increase of 4.0% more than the anticipated 3.9%.
- Australia’s Westpac Consumer Confidence declined by 2.6% in November, swinging from the previous growth of 2.9%.
- RBA Assistant Governor (Economic) Marion Kohler stated that the decline in inflation is expected to be slower than initially anticipated. This is attributed to the persistent high level of domestic demand and robust pressures from labor and other costs. Kohler emphasized the need for a tighter policy to address the challenges posed by elevated inflation.
- Economists at the National Australia Bank (NAB) anticipate another 25 basis points hike in February following the Q4 inflation data. Additionally, NAB believes rate cuts will unlikely commence until November 2024.
- China’s Industrial Production (YoY) showed growth at 4.6% in October, a slight increase from the previous 4.5%, contrary to expectations of consistency. Retail Sales year-over-year saw an uptick to 7.6%, surpassing the anticipated 7.0%.
- The US Consumer Price Index (CPI) for October showed lower readings than expected, with the annual rate slowing from 3.7% to 3.2%, falling below the consensus forecast of 3.3%. The monthly CPI reduced to 0.0% from 0.4%.
- The US Core CPI rose by 0.2% below the expectations of 0.3%, and the annual rate decreased to 4.0% from 4.1% prior.
- US Monthly Budget Statement reported a deficit of $67B in October, compared to the expected deficit of $65B.
Technical Analysis: Australian Dollar remains below the 0.6500 major level lined up with the 38.2% Fibonacci retracement
The Australian Dollar trades around the 0.6490 level on Thursday, in line with immediate resistance at the psychological level of 0.6500. The next resistance levels include the 38.2% Fibonacci retracement at 0.6508 and the 50% Fibonacci retracement at 0.6582. On the downside, the AUD/USD pair may find support at the 14-day Exponential Moving Average (EMA) at 0.6429, followed by the major support level at 0.6400.
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 Japanese Yen.
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
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.
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.
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.
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.
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.