- The Australian Dollar holds steady as traders remain cautious ahead of the release of the US November Consumer Price Index (CPI) data.
- The AUD has faced pressure following the Reserve Bank of Australia’s decision to keep interest rates unchanged at 4.35% during its December meeting
- Forecasts for the US CPI suggest an annual increase of 2.7%, with core inflation expected to climb to 3.3% in November
The Australian Dollar (AUD) remains under pressure against the US Dollar (USD) on Wednesday, with the AUD/USD pair struggling due to the strength of the USD. Market participants are now awaiting the release of the US November Consumer Price Index (CPI) data, set to be published during the North American trading session.
US CPI inflation is projected to rise to 2.7% year-over-year (YoY) in November, up from 2.6% in October. Core CPI, which excludes Food and Energy, is expected to maintain a steady 3.3% YoY increase. Any signs of stagnant progress in inflation reduction could reduce the likelihood of a Federal Reserve rate cut, potentially strengthening the USD. According to the CME FedWatch Tool, traders currently assign an 85.8% probability of a 25-basis-point Fed rate cut on December 18.
The AUD remains under downward pressure following the Reserve Bank of Australia’s (RBA) decision to hold the Official Cash Rate (OCR) at 4.35% during its December meeting. RBA Governor Michele Bullock noted that while inflationary pressures have eased, risks still exist and require close monitoring. The RBA emphasized that economic data, including employment figures, will play a key role in shaping future policy actions.
Australian Dollar declined after the RBA decision to keep interest rates unchanged
- China President Xi Jinping stated on Tuesday, “China has full confidence in achieving this year’s economic target.” Xi emphasized that China will continue to serve as the largest engine of global economic growth and asserted that there would be no winners in tariff wars, trade wars, or tech wars.
- China’s Trade Balance (CNY) increased to CNY 692.8 billion in November, up from CNY 679.1 billion in the previous month. Exports grew by 1.5% year-over-year in November, compared to the 11.2% rise in October. Meanwhile, imports increased by 1.2% YoY, recovering from the 3.7% decline recorded earlier.
- The Australian Unemployment Rate remained at 4.1% in October for the third consecutive month. The economy added 9,700 full-time jobs and 6,200 part-time roles, making a net change of 15,900 positions.
- The RBA’s closely watched inflation gauge, the annual Trimmed Mean Consumer Price Index (CPI), slowed to 3.5% from 4.0% in the third quarter but stayed well above the Bank’s 2%- 3% target.
- Australia’s economy grew at its slowest annual pace since the pandemic in the third quarter. The OZ nation’s Gross Domestic Product (GDP) rose 0.3% in the September quarter, missing market forecasts of 0.4%. Weaker-than-expected GDP growth made markets almost fully price in a rate cut next April at 96% (from 73% before), according to Refinitive interest rate probabilities data.
- US November NFP data from Friday showed a robust 227,000 gain, well above expectations, and stable Average Hourly Earnings growth at 0.4% MoM.
- The AUD received support from improved sentiment and stimulus expectations from China. China’s leaders announced plans for proactive fiscal and looser monetary policies to accelerate domestic consumption in 2024.
- Weak Chinese CPI data (-0.6% in November, worse than expected) highlights challenges in the recovery but bolsters stimulus speculation.
Technical Analysis: Australian Dollar Approaches 0.6350 Near Yearly Lows
The AUD/USD pair trades near 0.6370 on Wednesday, with technical indicators suggesting growing bearish momentum. On the daily chart, the pair continues its decline within a descending channel pattern. The 14-day Relative Strength Index (RSI) remains slightly above 30, signaling persistent bearish sentiment.
Immediate support is located around the yearly low of 0.6348, last recorded on August 5. A decisive break below this level could amplify bearish momentum, potentially driving the pair toward the descending channel’s lower boundary near 0.6220.
On the upside, initial resistance is seen near the nine-day Exponential Moving Average (EMA) at 0.6428, followed by the 14-day EMA at 0.6449, which aligns closely with the channel’s upper boundary. A sustained breakout above this resistance zone could shift sentiment, opening the door for a rally toward the seven-week high at 0.6687.
AUD/USD: Daily Chart
Australian Dollar Performance Today
The table below highlights the percentage change of the Australian Dollar (AUD) against various major currencies. Today, the Australian Dollar showed the most strength against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.00% | 0.04% | -0.18% | -0.05% | 0.11% | 0.10% | 0.05% | |
| EUR | -0.00% | 0.03% | -0.16% | -0.05% | 0.10% | 0.10% | 0.05% | |
| GBP | -0.04% | -0.03% | -0.21% | -0.09% | 0.07% | 0.06% | 0.02% | |
| JPY | 0.18% | 0.16% | 0.21% | 0.13% | 0.29% | 0.27% | 0.24% | |
| CAD | 0.05% | 0.05% | 0.09% | -0.13% | 0.16% | 0.15% | 0.10% | |
| AUD | -0.11% | -0.10% | -0.07% | -0.29% | -0.16% | -0.01% | -0.06% | |
| NZD | -0.10% | -0.10% | -0.06% | -0.27% | -0.15% | 0.01% | -0.04% | |
| CHF | -0.05% | -0.05% | -0.02% | -0.24% | -0.10% | 0.06% | 0.04% |
