Australian Dollar slipped from four-year highs ahead of RBA minutes and China data
- The RBA Meeting Minutes and Chinese activity data next week looms as the next major tests for the Australian Dollar.
- US Retail Sales matched at 0.5% MoM while Initial Jobless Claims edged higher to 211K against a 205K consensus.
AUD/USD eased 0.5% on Thursday, pulling back from four-year highs as the session drifted steadily lower through the afternoon. The pair had been pressing against the 0.7280 area, the strongest territory since June 2022, and bullish momentum waned after the recent run higher. The daily candle closed near session lows.
The Australian Dollar is holding near four-year peaks despite a quiet domestic calendar on Thursday, leaving traders waiting on next week's set of higher-impact catalysts. The Reserve Bank of Australia (RBA) Meeting Minutes on Tuesday will be parsed for guidance on the rate path, with Westpac Consumer Confidence the same day expected to show whether April's deeply negative -12.5% print has stabilized. China's April Industrial Production and Retail Sales release on Monday and remain a key external input for the Australian Dollar given trade exposure, with prior YoY readings at 5.7% and 1.7% respectively.
On the US Dollar side, April Retail Sales matched consensus at 0.5% MoM, and ex-autos beat slightly at 0.7%, suggesting the US consumer is cooling from the 1.6% MoM gain in March. Initial Jobless Claims edged up to 211K against a 205K consensus. Four Fed officials, including New York Fed President John Williams, crossed the wires Thursday, with markets now turning to next Wednesday's FOMC Minutes and Thursday's preliminary S&P Global Purchasing Managers Index (PMI) releases for the next read on US activity.
AUD/USD 5-minute chart
Technical Analysis
In the five-minute chart, AUD/USD trades at 0.7222. The pair retains a mild bearish intraday bias as it holds beneath the day’s open at 0.7258, keeping the latest bounce contained within a broader corrective tone. The Stochastic RSI has eased toward the mid-50s area recently and now hovers near neutral around 49, hinting at fading upside momentum after earlier overbought readings.
On the topside, initial resistance is located at the day’s open near 0.7258, and a sustained break above this level would be needed to suggest a more convincing recovery. On the downside, the lack of nearby measured supports on this timeframe leaves the pair vulnerable to further slippage, with intraday bidders likely to emerge only at lower, as-yet-untested price areas.
In the daily chart, AUD/USD trades at 0.7222. The pair keeps a constructive near-term bias as spot holds above the 50-day exponential moving average (EMA) at 0.7108 and the 200-day EMA at 0.6847, suggesting a firmly supported underlying trend. The Stochastic RSI hovers in elevated territory near 72, hinting that bullish momentum remains in place even as the advance becomes more stretched.
On the downside, initial support is seen at the 0.7108 area, where the 50-day EMA aligns as the first dynamic floor, with the 200-day EMA around 0.6847 reinforcing the broader bullish structure if a deeper pullback unfolds. With no nearby mapped resistances above current levels in this dataset, traders may look to price action and emerging swing highs for fresh reference points while the prevailing bias remains positive as long as spot holds above the key moving averages.
(The technical analysis of this story was written with the help of an AI tool.)
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.
Author
Joshua Gibson
FXStreet
Joshua joins the FXStreet team as an Economics and Finance double major from Vancouver Island University with twelve years' experience as an independent trader focusing on technical analysis.
