Australian Dollar recedes despite hawkish RBA , US mid-tier data


  • AUD/USD continues trading close to dangerous levels near 0.6600.
  • Aussie Dollar could benefit from the hawkish tone surrounding the RBA.
  • The USD saw some gains due to strong sentiment data from the University of Michigan.

The AUD/USD declined by 0.21% to 0.6620 in Friday's session despite the Reserve Bank of Australia's (RBA) hawkish policy outlook. The decline was primarily attributed to the appreciation of the US Dollar amid less-dovish sentiment surrounding the Federal Reserve (Fed) and strong University of Michigan (UoM) sentiment data, which overshadowed soft Durable Goods figures.

However, the Aussie Dollar could benefit from the RBA's hawkish tone in the coming days.

Daily digest market movers: Australian Dollar declines on US data

  • AUD weakened versus USD primarily due to the release of strong UoM data and Durable Goods lower than expected decline.
  • In that sense, Durable Goods Orders in the US declined by 0.8% in September, slightly better than market expectations of a 1% decline.
  • UoM’s Consumer Sentiment index rose to 70.5 in October, beating expectations.
  • The strong US data might prompt the Fed to take a more hawkish stance and table the two consensus cuts for November and December.
  • In the meantime, the RBA isn’t showing signs of being completely open to start cutting with markets only betting on 50% chances of a cut in 2024 which could eventually benefit the AUD.

AUD/USD technical outlook: AUD/USD bearish momentum dominates, support at 0.6600

The AUD/USD pair extended its losses on Friday. The Relative Strength Index (RSI) fell into the oversold area, with a value of 34, and is exhibiting a mildly declining slope, suggesting that selling pressure is rising. The Moving Average Convergence Divergence (MACD) histogram is red and rising, indicating that bearish momentum is increasing.

Overall, the technical outlook for the AUD/USD pair is bearish. The decline in the RSI and the rising MACD histogram suggest that selling pressure is dominating the market. However, it is important to note that the pair is trading near support at 0.6600 and may experience a bounce if it manages to hold above this level.

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.

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended content

Editors’ Picks

EUR/USD falls as Wall Street turns red

EUR/USD falls as Wall Street turns red

EUR/USD turned bearish as Wall Street gives up and major indexes turn red. The pair trades near a fresh weekly low in the 1.0460 price zone. Earlier in the day, the European Central Bank trimmed interest rates as expected, and the United States published discouraging employment and inflation-related data.  

EUR/USD News
GBP/USD dips below 1.2700 as US Dollar surges on risk aversion

GBP/USD dips below 1.2700 as US Dollar surges on risk aversion

GBP/USD finally broke below the 1.2700 mark in the American session, as sentiment shifted to the worse, following dismal US employment and inflation-related data. The poor performance of stocks and an uptick in Treasury yields boost demand for the US Dollar. 

 

 

GBP/USD News
Gold price plummets as traders cash in on hot US PPI

Gold price plummets as traders cash in on hot US PPI

Gold prices snapped a four-day streak of gains on Thursday, tumbling more than 1% as investors digested mixed economic data from the United States. A softer than expected jobs report, but higher prices on the producer’s side, kept traders from pushing Bullion prices higher. 

Gold News
Crypto Today: Bitcoin price tops $102K as Trump’s firm acquires Ethereum and Chainlink

Crypto Today: Bitcoin price tops $102K as Trump’s firm acquires Ethereum and Chainlink

The cryptocurrency sector valuation broke past $3.5 trillion on Thursday, up 9.4% since the market crash halted on Tuesday. In the last 24 hours, 104,700 traders were liquidated with the $172.7 million in long contracts closed accounting for 58% of the $298.5 million in total liquidations. 

Read more
Can markets keep conquering record highs?

Can markets keep conquering record highs?

Equity markets are charging to new record highs, with the S&P 500 up 28% year-to-date and the NASDAQ Composite crossing the key 20,000 mark, up 34% this year. The rally is underpinned by a potent mix of drivers.

Read more
Best Forex Brokers with Low Spreads

Best Forex Brokers with Low Spreads

VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.

Read More

Forex MAJORS

Cryptocurrencies

Signatures