- The Australian dollar is gaining as the US dollar has retreated from a two-year high of $108.07 on Friday.
- The S&P/ASX 200 index rose to an all-time high above 8,450 as Australian shares reflected Wall Street's momentum.
- President-elect Donald Trump has selected Scott Bessent, a Wall Street veteran and fiscal conservative, to be his Treasury secretary.
The Australian dollar (AUD) rose on Monday as the US dollar (USD) continued its downward correction. The move was partly influenced by optimism in the bond market after President-elect Donald Trump chose Scott Bessent, a Wall Street veteran and fiscally conservative fund manager, to be his Treasury secretary. Ta.
The Australian dollar is also likely to have benefited from inflows from overseas as the domestic stock market hit record highs. The S&P/ASX 200 index rose 0.63% to over 8,450 as Australian shares reflected Wall Street's momentum. On Friday, the Dow Jones Industrial Average closed at a record high again, contributing to the rise in sentiment.
Additionally, the Reserve Bank of Australia (RBA)'s hawkish stance on future interest rate decisions also supported the Australian dollar. Traders are now focused on the Australian monthly consumer price index (CPI) for October, a key indicator in forming expectations about domestic monetary policy.
In its latest minutes, the RBA stressed that interest rate caps will remain in place until there is clear evidence of a sustained return to target for inflation. However, the central bank also emphasized that future policy adjustments will depend on data and stressed the importance of future economic reports.
Australian dollar gains as US dollar corrects downward after hitting two-year high
- The US Dollar Index (DXY), which tracks the performance of the US dollar against six major currencies, fell to around 107.00 after hitting a two-year high of 108.07 on Friday. However, recent strong preliminary results from the S&P Global U.S. Purchasing Managers' Index (PMI) have strengthened expectations that the Federal Reserve may slow the pace of interest rate cuts, leading to downside risk remains limited.
- Futures traders now place the probability that the Federal Reserve will cut interest rates at 50.9%, down from about 61.9% a week ago, according to the CME FedWatch tool. . Meanwhile, U.S. Treasury yields rose on expectations that President-elect Donald Trump's proposed tariff, immigration and tax policies could stimulate inflation and constrain the Fed's ability to further reduce borrowing costs. It continues to rise.
- The S&P Global US Composite PMI rose to 55.3 in November, indicating the strongest growth in private sector activity since April 2022. The U.S. services industry PMI was 57.0, up from 55.0 in October and significantly exceeding the market expectations of 55.2, marking the fastest expansion ever. Meanwhile, the US manufacturing PMI rose to 48.8 from 48.5 in October, almost in line. Along with market forecasts.
- The Australian Judo Bank PMI composite output index fell to 49.4 in November from 50.2 in October, indicating private sector production contracted the smallest amount in three months. The manufacturing PMI in November was 49.4, up from 47.3 in October, marking the 10th consecutive month of negative growth. Meanwhile, the Services PMI fell from 51.0 to 49.6, suggesting that services activity contracted for the first time in 10 months.
- Australia's four biggest banks expect the Reserve Bank of Australia to make its first interest rate cut. Westpac has revised upward its forecast for an initial interest rate cut by May from February. National Australia Bank (NAB) also expects a rate cut in May. Meanwhile, both the Commonwealth Bank of Australia (CBA) and ANZ are cautiously forecasting rate cuts in February.
- The number of new U.S. unemployment insurance claims for the week ending November 15 was 213,000, down from the previous week's revised figure of 219,000 (previously 217,000) and lower than expected by 220,000.
- Minutes of the Reserve Bank of Australia's November meeting showed the central bank's board remained cautious about the possibility of further inflation and stressed the importance of maintaining restrictive monetary policy. Board members stressed that while there is no “immediate need” to change the cash rate, all possibilities remain on the table, with options open for future adjustments.
- Chicago Fed President Austan Goolsby made headlines Thursday when he said inflation is steadily approaching its 2% target. Goolsby also noted that the labor market is moving toward stability and full employment. Looking ahead, he expects interest rates could fall significantly from current levels over the next year.
- Fed Chair Jerome Powell emphasized the economic resilience, strong labor market and sustained inflationary pressures, and downplayed the possibility of an imminent rate cut. “The economy is not sending a signal that we need to cut rates any faster,” Powell said.
Technical analysis: Australian dollar breaks above 9-day EMA and rises to around 0.6550
The AUD/USD pair was trading around 0.6540 on Monday, with technical analysis on the daily chart indicating that short-term momentum is strengthening. The pair is above the 9-day and 14-day exponential moving averages (EMAs), suggesting a potential upside bias.
However, AUD/USD remains confined within a descending channel, suggesting that the broader downtrend is still intact. Additionally, the 14-day Relative Strength Index (RSI) is just below the neutral 50 level. A decisive breakout above the 50 mark could provide a clearer signal for a change in direction and confirm bullish momentum.
On the downside, the AUD/USD pair could test immediate support at the 9-day EMA at 0.6520. A decisive break below this level could lead to a fall towards the lower end of the descending channel near the year-to-date low of 0.6348, which was last touched on August 5th.
On the upside, the AUD/USD pair is likely to aim for the upper bound of the descending channel at 0.6570. A break above this resistance could signal a change in momentum and pave the way for a rally towards the four-week high of 0.6687.
AUD/USD: daily chart
Australian dollar price today
The table below shows today's percentage change in the Australian Dollar (AUD) against major listed currencies. The Australian dollar was the strongest against the US dollar.
| USD | EUR | GBP | JPY | CAD | australian dollar | new zealand dollar | swiss franc | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.62% | -0.54% | 0.20% | -0.10% | -0.27% | -0.07% | -0.12% | |
| EUR | 0.62% | -0.09% | 0.19% | -0.08% | 0.27% | -0.03% | -0.08% | |
| GBP | 0.54% | 0.09% | 0.31% | 0.01% | 0.37% | 0.07% | 0.01% | |
| JPY | -0.20% | -0.19% | -0.31% | -0.28% | -0.02% | -0.19% | -0.12% | |
| CAD | 0.10% | 0.08% | -0.01% | 0.28% | -0.01% | 0.05% | -0.04% | |
| australian dollar | 0.27% | -0.27% | -0.37% | 0.02% | 0.01% | -0.30% | -0.35% | |
| new zealand dollar | 0.07% | 0.03% | -0.07% | 0.19% | -0.05% | 0.30% | -0.05% | |
| swiss franc | 0.12% | 0.08% | -0.01% | 0.12% | 0.04% | 0.35% | 0.05% |
The heat map shows the percentage change between major currencies. The base currency is selected from the left column and the quote currency is selected from the top row. For example, if you select Australian Dollars from the left column and move along the horizontal line to US Dollars, the percentage change displayed in the box represents AUD (Basic)/USD (Quote).
Australian Dollar Frequently Asked Questions
One of the most important factors for the Australian dollar (AUD) is the interest rate level set by the Reserve Bank of Australia (RBA). Australia is a resource-rich country, so another important factor is the price of its largest export, iron ore, which is Australia's largest trading partner, as well as its inflation, growth rate and trade. The health of China's economy is also a factor. balance. Market sentiment is also a factor, with investors taking on riskier assets (risk-on) or seeking safer assets (risk-off), with risk-on being positive for the Australian dollar.
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 affects the level of interest rates throughout the economy. The RBA's main goal is to maintain a stable inflation rate of 2-3% by adjusting interest rates up and down. The Australian dollar is supported by relatively high interest rates compared to other major central banks, and conversely by relatively low interest rates. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former being AUD-negative and the latter AUD-positive.
China is Australia's largest trading partner, so the health of the Chinese economy has a significant impact on the value of the Australian dollar (AUD). When China's economy does well, China buys more raw materials, goods and services from Australia, increasing demand for the Australian dollar and boosting its value. The opposite is true if China's economy is not growing as fast as expected. Therefore, positive or negative surprises in China's growth data often directly impact the Australian dollar and its pairs.
Iron ore is Australia's largest export, accounting for $118 billion annually, according to 2021 data, with China the main destination. Therefore, iron ore prices could be a driver for the Australian dollar. Generally, when the price of iron ore rises, the Australian dollar also rises because aggregate demand for the currency increases. The opposite is true if the price of iron ore falls. Higher iron ore prices tend to increase the likelihood of Australia's trade balance being positive, which is also positive for the Australian dollar.
The balance of trade is the difference between what a country earns from exports and what it pays for imports, and is another factor that can affect the value of the Australian dollar. If Australia produces a highly sought-after export, the country's currency will be deducted from just the surplus demand generated from foreign buyers seeking to buy that export, compared to the amount spent on purchasing the import. value increases. Therefore, a positive net trade balance will cause the Australian dollar to appreciate, while a negative trade balance will have the opposite effect.
