- The Australian dollar was supported after China’s Caixin Manufacturing Purchasing Managers’ Index was released on Thursday.
- China’s manufacturing output continued to rise in December, expanding for the 14th consecutive month.
- The US dollar has returned to multi-year highs due to hawkish policy changes from the Federal Reserve.
The Australian dollar (AUD) rose against the US dollar (USD) following the release of China’s Caixin Manufacturing Purchasing Managers’ Index (PMI) on Thursday. Any changes in the Chinese economy will affect the Australian economy as the union is imminent. Looking ahead, the focus later in the North American session will be on the US weekly jobless claims and the December S&P Global Manufacturing PMI.
China’s Caixin manufacturing PMI fell to 50.5 in December from 51.5 in November. The market expects a reading of 51.7 this month. “Supply and demand continue to rise,” said Wang Zhe, an economist at Caixin Think Tank. Output measurements remained in expansion territory for a 14th straight month, while total new orders rose for a third straight month.
RBA policy experts are more confident about inflation even as risks remain, with the commission saying monetary policy should remain “sufficiently restrictive” until inflation rises.
AUD Strengthens as US Dollar Rises, Fed’s Hawkish Stance in Focus
- The US Dollar Index (DXY), which tracks the value of the US Dollar against six major currencies, has rebounded to multi-year highs, trading around 108.50 at the time of writing. This surge is attributed to the US Federal Reserve’s (Fed) hawkish policy shift.
- The Federal Reserve may adopt a more cautious outlook regarding further rate cuts in 2025, signaling a shift in its monetary policy stance. This change reflects uncertainties surrounding potential policy adjustments in light of the anticipated economic strategies of the incoming Trump administration.
- Escalating geopolitical tensions in the Middle East and the ongoing Russia-Ukraine war are likely to support the USD, a traditional safe-haven currency, in the near term. Analysts at Action Economics observed, “The greenback has been boosted by rising growth concerns elsewhere against the backdrop of geopolitical risk.”
- Traders are cautious regarding President-elect Trump’s economic policies, fearing that tariffs could increase the cost of living. These concerns were compounded by the Federal Open Market Committee’s (FOMC) recent projections, which indicated fewer rate cuts in 2025, reflecting caution amid persistent inflationary pressures.
- China’s official Manufacturing PMI slipped to 50.1 in December, down from 50.3 in the previous reading and below market expectations of 50.3. Meanwhile, the NBS Non-Manufacturing PMI improved significantly, rising to 52.2 in December from November’s 50.0 and beating estimates of 50.2.
- The RBA board noted that if future data aligns with or falls below forecasts, it would bolster confidence in inflation and make it appropriate to start easing policy restrictions. However, stronger-than-expected data could require maintaining restrictive policies for a longer period.
- Reserve Bank of Australia Governor Michele Bullock highlighted the continued strength of the labor market as a key reason the RBA has been slower than other nations to commence its monetary easing cycle.
AUD/USD Surpasses 0.6200, Next Key Resistance at Nine-Day EMA
AUD/USD traded around 0.6210 on Thursday, maintaining a negative outlook on the calendar as it trades in a bearish formation. The 14-day relative strength index (RSI) has returned above 30, suggesting a depression is possible in the near term.
Immediate resistance is seen at the nine-day exponential moving average (EMA) at 0.6225 and the next resistance is seen at the 14-day EMA at 0.6251. The main resistance is the upper end of the slope near the sentiment level of 0.6300.
AUD/USD: Daily Chart Overview
Today’s Australian Dollar Market Price
The chart below shows today’s percentage change in the Australian Dollar (AUD) against major currencies. AUD/USD is the best performing pair.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.10% | -0.11% | -0.13% | -0.07% | -0.47% | -0.37% | -0.17% | |
| EUR | 0.10% | -0.08% | 0.03% | 0.01% | -0.33% | -0.31% | -0.07% | |
| GBP | 0.11% | 0.08% | 0.08% | 0.05% | -0.35% | -0.25% | -0.09% | |
| JPY | 0.13% | -0.03% | -0.08% | -0.03% | -0.40% | -0.36% | -0.16% | |
| CAD | 0.07% | -0.01% | -0.05% | 0.03% | -0.41% | -0.33% | -0.11% | |
| AUD | 0.47% | 0.33% | 0.35% | 0.40% | 0.41% | 0.03% | 0.09% | |
| NZD | 0.37% | 0.31% | 0.25% | 0.36% | 0.33% | -0.03% | 0.26% | |
| CHF | 0.17% | 0.07% | 0.09% | 0.16% | 0.11% | -0.09% | -0.26% |
