- AUD/USD trades near 20-month high at 0.6908
- Australia’s monthly consumer price index rose 2.7% year-on-year in August, below expectations for a 2.8% increase and the previous 3.5% increase.
- Central bank Gongsheng announced a 50 basis point cut in the deposit rate and a 7-day repo rate cut from 1.7% to 1.5%.
The Australian dollar (AUD) gave up intraday gains against the US dollar (USD) but held on to slightly higher gains after weaker-than-expected market prices on Wednesday. However, Australian dollar-linked stocks were supported by the announcement of new support measures by its biggest trading partner China.
The Reserve Bank of Australia (RBA) kept the cash rate (OCR) unchanged at 4.35% on Tuesday, providing support to the Australian dollar and supporting the AUD/USD exchange rate. Speaking at a press conference following the policy decision, RBA Governor Michelle Bullock confirmed that interest rates would remain unchanged for now and clarified that no clear decision had been made on a rate hike during the meeting.
People’s Bank of China (PBOC) Governor Pan Gongsheng announced on Tuesday that China will cut its reserve ratio (RRR) by 50 basis points (bps). Gongsheng also said the central bank will cut the seven-day repo rate to 1.5% from 1.7% and the down payment rate for both homes to 15% from 25%. Separately on Thursday, the People’s Bank of China lowered the average one-year loan (MLF) rate to 2.0% from 2.30%.
Business Daily Business Digest: Aussie dollar holds steady as RBAA hawks stance
- Australian Treasurer Jim Chalmers will visit China this week to strengthen economic ties between the two countries. Given our vulnerability to fluctuations in the Chinese economy, it is crucial to meet with key Chinese officials in Beijing over the next two days, Chalmers said.
- In a recent note, JP Morgan advised investors to monitor commodities and bond yields in light of the positive market outlook following China’s stimulus proposals on Tuesday. The bank emphasized that global growth has received a new boost from China, a factor that has been lacking in recent years. This development notably reduces the risk of a recession and is seen as favorable for the markets. However, JP Morgan also cautioned about the potential risk of reinflation.
- Australia’s Monthly Consumer Price Index rose 2.7% year-over-year in August, down from the previous 3.5% rise and expected 2.8% increase.
- Federal Reserve Governor Michelle Bowman stated on Tuesday that key inflation indicators are still “uncomfortably above” the 2% target, urging caution as the Fed moves forward with interest rate cuts. Despite this, she expressed a preference for a more conventional approach, advocating for a quarter percentage point reduction.
- US Consumer Confidence Index fell to 98.7 in September from a revised 105.6 in August. This figure registered the biggest decline since August 2021.
- The ANZ-Roy Morgan Australia Consumer Confidence Index rose by 0.8 points to 84.9 this week. Despite this increase, Consumer Confidence has now remained below the 85.0 mark for 86 consecutive weeks. On a year-over-year basis, the index is up by 8.5 points from 76.4.
- The S&P Global US Composite Purchasing Managers Index (PMI) grew at a slower rate in September, registering 54.4 compared to 54.6 in August. The Manufacturing PMI unexpectedly dropped to 47.0, indicating contraction, while the Services PMI expanded more than anticipated, reaching 55.4.
- Chicago Fed President Austan Goolsbee noted, “Many more rate cuts are likely needed over the next year, rates need to come down significantly.” Additionally, Atlanta Fed President Raphael Bostic said Monday that the US economy is close to normal rates of inflation and unemployment and the central bank needs monetary policy to “normalize” as well, per Reuters.
- Australia’s Judo Bank Composite PMI declined to 49.8 in September from 51.7 in August, indicating a contraction in business activity as slower growth in the services sector was unable to counterbalance a deeper slump in manufacturing output. The Services PMI fell to 50.6 in September from 52.5 previously, while the Manufacturing PMI decreased to 46.7 from 48.5 in August.
Analysis: Australian dollar moves to top of bullish channel, near 0.6900
AUD/USD was trading around 0.6890 on Wednesday. Analysis of the daily chart shows that the pair is moving into an ascending channel, indicating a trend. Also, the 14-day relative strength index (RSI) is approaching the 70 level, suggesting that progress is still possible but will soon face a correction.
On the resistance front, AUD/USD is likely to test the bullish upper limit of 0.6930 followed by the sentiment of 0.6950.
The AUD/USD pair could find support at the lows of the uptrend above the nine-day exponential moving average (EMA) at 0.6816. The next important support is at the psychological level of 0.6700. A move there could push the pair towards a six-week low of 0.6622.
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 strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.14% | -0.03% | 0.03% | -0.01% | 0.04% | 0.10% | -0.10% | |
| EUR | 0.14% | 0.12% | 0.19% | 0.13% | 0.19% | 0.26% | 0.02% | |
| GBP | 0.03% | -0.12% | 0.04% | 0.01% | 0.07% | 0.10% | -0.09% | |
| JPY | -0.03% | -0.19% | -0.04% | -0.04% | 0.02% | 0.07% | -0.14% | |
| CAD | 0.01% | -0.13% | -0.01% | 0.04% | 0.06% | 0.12% | -0.10% | |
| AUD | -0.04% | -0.19% | -0.07% | -0.02% | -0.06% | 0.08% | -0.15% | |
| NZD | -0.10% | -0.26% | -0.10% | -0.07% | -0.12% | -0.08% | -0.23% | |
| CHF | 0.10% | -0.02% | 0.09% | 0.14% | 0.10% | 0.15% | 0.23% |
