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Australian dollar moves little on RBA Hunter statements, US presidential debate

  • AUD/USD remains flat following remarks from RBA Deputy Governor (Economy) Sarah Hunter.
  • The RBA’s Sarah Hunter noted that high rates are suppressing demand, which is expected to lead to a mild economic recession.
  • Donald Trump has argued that the tariffs he plans to impose on imports would not lead to higher prices in the US.

The AUD/USD pair is holding its position on Wednesday following comments from Reserve Bank of Australia (RBA) Deputy Governor for Economics Sarah Hunter. However, the Australian dollar’s (AUD) losses could be appreciated as RBA Governor Michele Bullock maintained a dovish outlook last week, stressing that it was too early to consider rate cuts with high inflation.

RBA Deputy Governor Sarah Hunter noted that high interest rates are dampening demand, contributing to what is expected to be a mild economic downturn. Hunter also pointed out that the labor market remains tight compared to employment levels, with employment growth likely to continue but at a slower pace than population growth, according to Reuters.

Read more: RBA’s Hunter: Labor market easing similar to mild recessions of the past

The AUD/USD pair came under pressure as the US dollar gained strength following a recent US labor market report that cast doubt on the possibility of an aggressive rate cut by the Federal Reserve (Fed) at its next September meeting.

During the US presidential debate, Donald Trump argued that the tariffs he plans to impose on imports will not result in higher prices for Americans. He stated: “Who will have higher prices in China and in all the countries that have cheated us for years.”

Daily Digest Market Movers: Aussie Dollar Strengthens Amid Rising, Risk-Off Sentiment

  • According to the CME FedWatch tool, markets fully anticipate a rate cut of at least 25 basis points (bps) by the Federal Reserve at its September meeting. The probability of a 50 bps rate cut fell slightly to 31.0%, down from 38.0% a week ago.
  • Morgan Stanley’s chief economist Robin Xing said China is undoubtedly facing deflation, probably in the second stage of the process. Xing noted that Japan’s experience suggests that the longer deflation persists, the greater the need for China to implement significant stimulus measures to overcome the challenge of debt deflation, according to Business Standard.
  • Australia’s Westpac consumer confidence fell 0.5% month-on-month in September, swinging from a 2.8% rise in August.
  • China’s trade balance reported a trade surplus of CNY 649.34 billion for August, up from the previous reading of CNY 601.90 billion. Meanwhile, China’s exports (CNY) rose 8.4% year-on-year, following a previous increase of 6.5%.
  • RBC Capital Markets now expects the Reserve Bank of Australia to implement a rate cut at its February 2025 meeting, earlier than its previous forecast of May 2025. Despite inflation in Australia remaining elevated above the RBA’s target, economic growth slow is not considered a sufficient reason. for a rate cut this year.
  • The US Bureau of Labor Statistics (BLS) reported that non-farm payrolls (NFP) added 142,000 jobs in August, below the forecast of 160,000, but an improvement from July’s downwardly revised figure of 89,000. Meanwhile, the unemployment rate fell to 4.2 percent, in line with expectations, from 4.3 percent the previous month.
  • Federal Reserve (Fed) Bank of Chicago President Austan Goolsbee noted on Friday that Fed officials are beginning to align with broader market sentiment that a policy rate adjustment by the US central bank is imminent, according to CNBC. FXStreet’s FedTracker, which uses a custom AI model to rate Fed officials’ speeches on a scale of 0 to 10, rated Goolsbee’s comments as upbeat, assigning them a score of 3.2.

Technical Analysis: AUD is hovering around 0.6650, followed by the lower boundary of the descending channel

The AUD/USD pair is trading near 0.6650 on Wednesday, with technical analysis on the daily chart indicating that the pair remains in a descending channel, signaling a bearish trend. The 14-day Relative Strength Index (RSI) is also below the 50 level, further confirming the ongoing bearish trend.

On the downside, AUD/USD may target the lower limit of the descending channel around 0.6620. A break below this level could strengthen the bearish outlook, potentially pushing the pair towards the support area for a retracement around 0.6575.

On the other hand, the AUD/USD pair may encounter resistance around the nine-day exponential moving average (EMA) at 0.6693, followed by the upper limit of the descending channel near 0.6740. A break above this upper limit could reduce the bearish trend, potentially paving the way for the pair to retest its seven-month high of 0.6798, last touched on July 11.

AUD/USD: Daily chart

Australian Dollar PRICE Today

The table below shows the percentage change of the Australian Dollar (AUD) against the major listed currencies today. The Australian dollar was the strongest against the US dollar.

USD EURO GBP JPY CAD AUD NZD CHF
USD -0.15% -0.08% -0.37% -0.06% -0.08% 0.02% -0.22%
EURO 0.15% 0.08% -0.20% 0.11% 0.13% 0.17% -0.06%
GBP 0.08% -0.08% -0.30% 0.02% -0.00% 0.09% -0.14%
JPY 0.37% 0.20% 0.30% 0.34% 0.30% 0.38% 0.16%
CAD 0.06% -0.11% -0.02% -0.34% -0.03% 0.07% -0.17%
AUD 0.08% -0.13% 0.00% -0.30% 0.03% 0.03% -0.13%
NZD -0.02% -0.17% -0.09% -0.38% -0.07% -0.03% -0.23%
CHF 0.22% 0.06% 0.14% -0.16% 0.17% 0.13% 0.23%

The heat map shows the percentage changes of major currencies against each other. The base currency is chosen from the left column, while the quote currency is chosen from the top row. For example, if you choose the Australian dollar in the left column and move along the horizontal line to the US dollar, the percentage change shown in the box will be AUD (base)/USD (quote).

Australian Dollar FAQ

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). Because Australia is a resource-rich country, another key factor 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 Australia’s inflation, growth rate and trade. Balance. Market sentiment – ​​whether investors are taking riskier assets (risk-on) or seeking safe havens (risk-off) – is also a factor, with risk positive for the AUD.

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 influences the level of interest rates in the economy as a whole. The main aim 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 is relatively low. The RBA can also use quantitative easing and tightening to influence lending conditions, the former AUD-negative and the latter AUD-positive.

China is Australia’s largest trading partner, so the health of the Chinese economy has a major influence on the value of the Australian dollar (AUD). When the Chinese economy is doing well, it buys more raw materials, goods and services from Australia, increasing 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. Therefore, positive or negative surprises in China’s growth data often have a direct impact on the Australian dollar and its pairs.

Iron ore is Australia’s biggest export, accounting for $118 billion a year, according to 2021 data, with China as the main destination. Therefore, the price of iron ore can be a driver of the Australian dollar. Generally, if the price of iron ore rises, so does the AUD, as aggregate demand for the currency rises. The opposite is true if 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 balance of trade, 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 only gain in value from the excess demand created by foreign buyers wanting to buy its exports over what it spends on buying its imports. A positive net trade balance therefore strengthens the AUD, with the opposite effect if the trade balance is negative.

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