- The Australian dollar has fallen as the US dollar gains strength from unexpectedly positive economic data in the US.
- The AUD faces challenges amid risk aversion following President Trump’s announcement of plans for 100% tariffs on drug imports.
- Traders are awaiting personal consumption expenditure price index data, which is the Federal Reserve’s favored inflation indicator, later today.
The Australian Dollar (AUD) is showing signs of weakness against the US Dollar (USD) on Friday after a two-day decline. The AUD/USD exchange rate has dropped as the Greenback finds support from better-than-expected economic reports from the US.
This downward trend is also influenced by a heightened sense of risk after President Trump revealed intentions to impose 100% tariffs on imported brand-name or patented drugs starting October 1, unless pharmaceutical companies establish manufacturing plants in the US, as reported by Reuters.
In related news, Australia’s consumer price index (CPI) increased by 3.0% year-on-year in August, a rise from July’s 2.8%. Market expectations suggest there’s only a 4% chance of interest rate cuts happening in September, and the likelihood of a rate cut from the Reserve Bank of Australia (RBA) in November has decreased from nearly 70% to around 50%, according to Reuters.
The Australian dollar stabilizes as the US dollar remains steady ahead of PCE data
- The US Dollar Index (DXY), which measures the USD against six primary currencies, is around 98.40 at the time of reporting. Traders will soon watch for the upcoming personal consumption expenditure (PCE) price index, an important inflation measure for the Federal Reserve.
- US gross domestic product (GDP) grew by 3.8% in the second quarter, exceeding earlier estimates of 3.3%. The GDP price index rose 2.1% during the same period, slightly above the anticipated 2.0% growth.
- The number of initial unemployment claims in the US dropped from 232,000 to 218,000 last week, falling below expectations of 235,000.
- Kansas City Fed President Jeffrey Schmidt has indicated that interest rate cuts are essential to maintain a healthy job market.
- Chicago Federal President Austan Goolsbee expressed reluctance to relax policies further while inflation remains above target.
- Federal Reserve Governor Stephen Miran favors a more aggressive 0.50% rate cut to prevent a downturn in the labor market.
- San Francisco Fed President Mary Daly mentioned that additional rate cuts may be necessary to achieve price stability and support the labor market.
- The US S&P Global Composite PMI recorded 54.6 in August, down from 53.6, indicating challenges in the private sector. The Manufacturing PMI decreased from 53 to 52.0, showing reduced momentum, while the Service PMI slipped from 54.5 to 53.9, hinting at easing demand.
- Federal Reserve Chairman Jerome Powell raised concerns on Tuesday about weak labor markets and persistent inflation, suggesting potential rate cuts at the September meeting. He did, however, indicate satisfaction with the current policy direction, although he is open to adjustments if needed.
- The White House announced that Australian Prime Minister Anthony Albanese and President Trump will meet face-to-face for the first time in Washington, DC on October 20 to discuss the Orcas Nuclear Submarine Agreement.
- Australia’s preliminary S&P Global Composite PMI fell to 52.1 in September from 55.5, marking the lowest level in three months. Both manufacturing and service sectors reported slower growth amid the fastest pace of new business inflows and declining product orders in eight months. The preliminary S&P Global Services PMI showed a slight drop from 55.8 in August to 52 in September, while Manufacturing PMI fell from 53.0 to 51.6.
- RBA Governor Michele Bullock stated earlier this week that the labor market has softened slightly with rising unemployment. While recent rate cuts should benefit households and businesses, the RBA needs to stay alert to changing conditions and respond when necessary.
Australian dollar remains below the 50-day EMA at approximately 0.6550
The AUD/USD is trading around 0.6530 on Friday. Technical analysis indicates that the pair is below the nine-day exponential moving average (EMA), reflecting a lack of short-term momentum. The 14-day relative strength index (RSI) is also under 50, signaling a bearish trend.
Should the AUD/USD pair drop, initial support may be found around a monthly low of 0.6483 from September 2. A breakthrough below this could push the pair toward the three-month low of 0.6414 recorded on August 21.
Resistance sits at 0.6550, corresponding to the 50-day EMA, followed by 0.6581 at the nine-day EMA. Surpassing these levels could enhance both short- and medium-term momentum, bringing the AUD/USD closer to the 11-month high of 0.6707 recorded on September 17.
AUD/USD: Daily Charts
Australian dollar prices today
The table below illustrates the changes in the Australian Dollar (AUD) against major currencies, with the Australian dollar performing strongest against the Canadian dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.08% | -0.04% | -0.13% | 0.04% | -0.13% | -0.02% | -0.04% | |
| EUR | 0.08% | 0.08% | 0.02% | 0.17% | 0.02% | 0.13% | 0.06% | |
| GBP | 0.04% | -0.08% | 0.00% | 0.10% | 0.03% | 0.05% | -0.04% | |
| JPY | 0.13% | -0.02% | 0.00% | 0.12% | -0.04% | 0.09% | -0.06% | |
| CAD | -0.04% | -0.17% | -0.10% | -0.12% | -0.17% | -0.02% | -0.14% | |
| AUD | 0.13% | -0.02% | -0.03% | 0.04% | 0.17% | 0.10% | 0.00% | |
| NZD | 0.02% | -0.13% | -0.05% | -0.09% | 0.02% | -0.10% | 0.02% | |
| CHF | 0.04% | -0.06% | 0.04% | 0.06% | 0.14% | -0.01% | -0.02% |
The rate of change for each major currency against the Australian dollar is displayed in this table. Each currency’s performance can be tracked based on the changes listed.
