- The Australian dollar faces challenges due to risk-off sentiment.
- Australia’s employment change report did not support the Australian dollar.
- New jobless claims in the United States reached 231,000, the highest level in nearly three months.
Despite lackluster economic data from the United States (US) released on Thursday, the Australian dollar (AUD) continues to fall on Friday, facing challenges. The decline in AUD/USD may be due to risk-off sentiment, which may be due to Federal Reserve uncertainty regarding the trajectory of interest rates. However, weaker U.S. labor market conditions and recent inflation data reinforce the view that the Fed is unlikely to raise rates further.
The Australian dollar (AUD) failed to benefit from strong Australian employment data and rising inflation expectations. October’s seasonally adjusted employment change increased significantly more than market expectations. However, the majority of job openings were part-time positions, slightly reducing the overall positive impact of the headline.
The US dollar index (DXY) traded sideways with a negative bias after a previous session marked by volatility, but ultimately in favor of the US dollar. Despite weak US economic data and depressed US Treasury yields, the US dollar (USD) managed to regain ground. The 10-year Treasury yield bottomed at 4.43% on Thursday.
Continuing unemployment claims in the United States for the week ending November 3 reached 1.865 million, the highest level since 2022, up from 1.833 million the previous year. Additionally, the number of new jobless claims rose to 231,000 for the week ending November 10, compared to the expected 220,000, the highest level in nearly three months. However, the Philadelphia Fed Manufacturing Survey reported a figure of -5.9, indicating an improvement compared to the previous reading of -9.0.
Looking ahead, Friday’s release of US housing data is expected to provide new insights into the housing sector, which could influence trading decisions on pairs such as AUD/USD.
Daily Digest Market Movers: Australian dollar falls on risk-off sentiment due to Fed uncertainty
- Australia’s seasonally adjusted employment change for October reported an increase of 55,000 people, compared to market expectations of 20,000 and 67,000 in the previous month.
- Australia’s unemployment rate in October was as expected at 3.7%, compared to the previous figure of 3.6%.
- The Australian Wage Price Index increased by 1.3% as expected, compared to the previous reading of 0.8%. Year-over-year data showed a 4.0% increase, above expectations of 3.9%.
- RBA Assistant Governor Marion Kohler said the fall in inflation was likely to be slower than expected due to persistently high domestic demand and strong labor and cost pressures, adding that the need to combat sustained inflation was likely to be slower than expected. emphasized the need for stricter policies.
- A meeting between US President Joe Biden and Chinese President Xi Jinping resulted in a promise to stabilize tense bilateral relations and restore some communications between the militaries.
- President Xi said he hopes the United States will stop supplying arms to Taiwan and support what China calls “peaceful reunification” with the island. Additionally, he calls on the United States to lift unilateral sanctions and create a fair and just environment for Chinese companies.
- China’s house price index in October fell by 0.38% compared to the previous 0.1% decline, indicating a worsening situation in the country’s real estate sector.
- China’s industrial production (year-on-year) grew by 4.6% in October, slightly up from the previous 4.5%, contrary to expectations that it would stabilize. Retail sales rose to 7.6% over the previous year, exceeding the expected 7.0%.
- The US Producer Price Index (PPI) fell 0.5% in October, compared to an expected 0.1% rise. The annual rate also dropped from 2.2% to 1.3%. These numbers are consistent with a slowdown in inflation that Tuesday’s U.S. Consumer Price Index (CPI) data showed.
- U.S. retail sales fell 0.1% in October, contrary to expectations for a 0.3% decline.
- The U.S. consumer price index (CPI) came in lower than expected in October, with the annual rate slowing to 3.2% from 3.7%, below the consensus estimate of 3.3%. Monthly CPI fell from 0.4% to 0.0%.
- The US core CPI growth rate was 0.2% lower than the expected 0.3%, and the annual rate fell to 4.0% from the previous 4.1%.
Technical analysis: Australian dollar remains above the 0.6450 major level supported by the 9-day EMA
The Australian dollar was trading near the 0.6460 level on Friday, consistent with the main near-term support at $0.6450. Further support could be found at the 9-day exponential moving average (EMA) at 0.6445 and the 14-day EMA at 0.6430. If there is a chance of further decline, the pair could head towards the major support level at 0.6400. On the upside, the AUD/USD pair may immediately encounter resistance at his 0.6500 psychological level. If the uptrend continues, the next resistance level includes the 38.2% Fibonacci retracement at 0.6508.
AUD/USD: daily chart
Australian dollar price today
The table below shows today’s percentage change in the Australian Dollar (AUD) against major listed currencies. The Australian dollar was the weakest against the Japanese yen.
|USD||EUR||GBP||CAD||australian dollar||JPY||new zealand dollar||Swiss franc|
|new zealand dollar||-0.31%||-0.26%||-0.07%||-0.26%||-0.15%||-0.37%||-0.29%|
The heat map shows the percentage change between major currencies. The base currency is selected from the left column and the quote currency is selected from the top row. For example, if you select Euro from the left column and move along the horizontal line to Japanese Yen, the percentage change displayed in the box represents EUR (base)/JPY (estimate).
Australian Dollar Frequently Asked Questions
One of the most important factors for the Australian dollar (AUD) is the interest rate level set by the Reserve Bank of Australia (RBA). Australia is a resource-rich country, so another important factor is the price of its largest export, iron ore, as well as Australia’s inflation, growth rate and trade, its largest trading partner. The health of China’s economy is also a factor. balance. Market sentiment is also a factor, with investors taking on riskier assets (risk-on) or seeking safer assets (risk-off), with risk-on being positive for the Australian dollar.
The Reserve Bank of Australia (RBA) influences the Australian dollar (AUD) by setting the level of interest rates at which Australian banks can lend to each other. This affects the level of interest rates throughout the economy. The RBA’s main goal is to maintain a stable inflation rate of 2-3% by adjusting interest rates up and down. The Australian dollar is supported by relatively high interest rates compared to other major central banks, and conversely by relatively low interest rates. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former being AUD-negative and the latter AUD-positive.
China is Australia’s largest trading partner, so the health of the Chinese economy has a significant impact on the value of the Australian dollar (AUD). When China’s economy does well, China buys more raw materials, goods and services from Australia, increasing demand for the Australian dollar and boosting its value. The opposite is true if China’s economy is not growing as fast as expected. Therefore, positive or negative surprises in China’s growth data often directly impact the Australian dollar and its pairs.
Iron ore is Australia’s largest export, accounting for $118 billion annually, according to 2021 data, with China the main destination. Therefore, iron ore prices could be a driver for the Australian dollar. Generally, when the price of iron ore rises, the Australian dollar also rises because aggregate demand for the currency increases. The opposite is true if the price of iron ore falls. Higher iron ore prices tend to increase the likelihood of Australia’s trade balance being positive, which is also positive for the Australian dollar.
The balance of trade is the difference between what a country earns from exports and what it pays for imports, and is another factor that can affect the value of the Australian dollar. If Australia produces a highly sought-after export, the country’s currency will be deducted from just the surplus demand generated from foreign buyers seeking to buy that export, compared to the amount spent on purchasing the import. value increases. Therefore, a positive net trade balance will cause the Australian dollar to appreciate, while a negative trade balance will have the opposite effect.
(This article was amended on 17 November at 07:20 GMT to remove a sentence referring to the upcoming release of US new unemployment insurance claims data, already announced on Thursday.)