- The Australian dollar will be depreciated on Thursday following unfortunate private capital expenditures.
- Private capital expenditures in Australia, unexpectedly contracted by 0.2% QOQ in the fourth quarter of 2024, did not meet the market expectations for growth of 0.8%.
- The US dollar continues to strengthen as traders assess the economic performance and tariff outlook.
The Australian Dollar (AUD) will lose ground against the US Dollar (USD) for the fifth consecutive day on Thursday. The AUD/USD pair is more advanced and edge despite the disappointing Australian private capital expenditure data, which was unexpectedly signed every 0.2% quarter in the fourth quarter of 2024 and has not missed the market forecast of 0.8% growth. This follows a 1.6% expansion revised upward in the last quarter.
Reserve Bank of Australia Lieutenant Governor Andrew Hauser said Thursday that he hopes for more positive news about inflation but emphasized that the importance of seeing this progress will come to fruition first. He said tensions in the Australian labor market are challenges to control inflation.
On Thursday, Le Ray, Lieutenant Governor of the People's Bank of China (PBOC), proposed to play an active role in supporting financing efforts, including issuing special financial obligations, to help major state-owned banks strengthen their common equity tier 1 (CET1) capital. It should be noted that changes in the Chinese economy could have an impact on AUD as China and Australia are close trading partners.
OUD faced headwinds on Wednesday, coinciding with the December increase, but failed to reach the market's 2.6% growth forecast.
The AUD/USD pair is under pressure amid rising risk sentiment of “moving forward” after a month's delay expires next week, following a statement from President Donald Trump earlier this week, sweeping out US tariffs on imports from Canada and Mexico. In addition to pressure, the Trump administration plans to tighten chip export controls in China, one of Australia's major trading partners.
Australian dollars may depreciate due to increased risk aversion
- The US Dollar Index (DXY), which measures USD against six major currencies, gains position as traders assess the strength of their economic and tariff outlook. DXY expands its profits to nearly 106.50 at the time of writing.
- Federal Reserve Bank of Atlanta President Rafael Bostic said late Wednesday that the Fed should hold interest rates where they are, on a Bloomberg-by-Bloomberg level, at a level where they continue to put downward pressure on inflation.
- U.S. Secretary of Commerce Howard Lutnick said late Wednesday that April 3 would serve as a baseline for mutual tariff data. Lutnick also cited China as a major concern, saying it would not allow US Chinese vehicles.
- US Treasury Secretary Scott Bescent has expressed his commitment to working with Congress to make President Trump's tax cuts permanent.
- The White House said late Wednesday that US President Donald Trump issued an executive order aimed at implementing a Department of Government Efficiency (DOGE) cost-cutting drive on a Reuters-by-Reuters basis. The executive order requires agents to justify spending, limit travel, and identify surplus federal properties that can be sold.
- On Friday, President Trump signed a memorandum dictating the US Foreign Investment Committee (CFIU) to limit Chinese investment in the strategic sector. Reuters said the National Security Memorandum attempts to encourage foreign investment while protecting the US national security interests from the potential threat posed by foreign enemies like China.
- The People's Bank of China (PBOC) injected $300 billion on Tuesday through a one-year medium-term lending facility (MLF) to keep the fee at 2%. Additionally, PBOC injected CNY318.5 billion from a 7-day reverse repos of 1.50%, consistent with previous rates.
- The increasing risk of a trade war promoted by Trump has become a major concern, according to a Wall Street Journal report on the Australian dollar outlook from the Federal Bank of Australia (CBA). China's response to these trade threats is a key factor shaping the future performance of AUD.
- The Reserve Bank of Australia (RBA) cut its official cash rate (OCR) by 25 basis points last week to 4.10%. Reserve Bank of Australia (RBA) Governor Michelle Bullock acknowledged the impact of high interest rates, but warned that it was too early to declare a victory over inflation. She also highlighted the strength of the labor market and made it clear that despite market expectations, future interest rate reductions are not guaranteed.
Support as Australia's Dollar Test 0.6300 bearish bias emerges
The AUD/USD pair will hover around 0.6300 on Thursday. Analyses of the daily charts show that the pair is below the 9- and 14-day index moving averages (EMA), weakening short-term price momentum. Additionally, the 14-day relative strength index (RSI) remains below 50, strengthening the general bearish outlook.
The AUD/USD pair tests immediate support at a psychological level of 0.6300. A break below this threshold could push the pair up towards the 0.6087 region, the lowest level since April 2020 recorded on February 3rd.
Conversely, the AUD/USD pair faces immediate resistance at 14 days of EMA of 0.6323 followed by 9 days of EMA at 0.6329. A critical break above these levels could bolster short-term price momentum, paving the way for the pair, who reached February 21, to challenge 0.6408 for two months.
AUD/USD: Daily Charts
(This story was revised to 02:15 GMT on February 27th, and in the first paragraph, it says, “The Australian Dollar (AUD) is profiting against the US Dollar (USD) on Thursday.”
Australian dollar prices today
The table below shows the rate of change in the Australian Dollar (AUD) for today's listed major currencies. The Australian dollar was the weakest against the US dollar.
| USD | EUR | GBP | JPY | CAD | aud | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.24% | 0.18% | 0.07% | 0.13% | 0.22% | 0.32% | 0.33% | |
| EUR | -0.24% | -0.06% | -0.17% | -0.12% | -0.02% | 0.08% | 0.09% | |
| GBP | -0.18% | 0.06% | -0.08% | -0.05% | 0.04% | 0.14% | 0.15% | |
| JPY | -0.07% | 0.17% | 0.08% | 0.04% | 0.13% | 0.19% | 0.24% | |
| CAD | -0.13% | 0.12% | 0.05% | -0.04% | 0.10% | 0.19% | 0.20% | |
| aud | -0.22% | 0.02% | -0.04% | -0.13% | -0.10% | 0.10% | 0.11% | |
| NZD | -0.32% | -0.08% | -0.14% | -0.19% | -0.19% | -0.10% | 0.01% | |
| CHF | -0.33% | -0.09% | -0.15% | -0.24% | -0.20% | -0.11% | -0.01% |
The heatmap shows the rate of change of each other's major currencies. The base currency is selected from the left column, and the estimated currency is selected from the top row. For example, if you select Australian dollars from the left column and move along the horizon to US dollars, the rate of change shown in the box represents AUD (base)/USD (QUOTE).
Australian Dollar FAQ
One of the most important factors in the Australian Dollar (AUD) is the interest rate level set by the Reserve Bank of Australia (RBA). As Australia is a resource-rich country, another important factor is the price of iron ore, the biggest export. The health of China's biggest trading partner is Australia's inflation, its growth rate and trade balance. Market sentiment – Whether investors are taking on riskier assets (risk-on) or seeking safe haven (risk-off) is another factor in risk-on positive for AUD.
The Reserve Bank of Australia (RBA) affects the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This affects the level of interest rates across the economy. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up and down. Compared to other major central banks, relatively high interest rates support AUD, the opposite of relatively low. RBAs can also use quantitative relaxation and tightening to influence credit conditions, along with previous Aud negative and the latter positives.
As China is Australia's largest trading partner, the health of China's economy has a major impact on the value of the Australian Dollar (AUD). If the Chinese economy is on track, they will buy more raw materials, goods and services from Australia, raising demand for AUD and increasing its value. The opposite is when the Chinese economy is not growing as fast as expected. Therefore, positive or negative surprises in China's growth data often have a direct impact on the Australian dollar and its pair.
Iron ore is Australia's largest export, with China as its main destination accounting for $118 billion a year, according to data from 2021. Therefore, iron ore prices could be a driver for the Australian dollar. Generally, as iron ore prices rise, so does AUD as aggregate demand for the currency increases. If iron ore prices fall, the opposite is true. Also, higher iron ore prices tend to be more likely to be positive for Australia's trade balance, which is also positive for AUD.
Trade balances, the difference between what a country acquires from exports and what it pays for imports, are another factor that can affect the value of the Australian Dollar. If Australia produces a very popular export, the currency acquires pure value from the surplus demand generated from foreign buyers seeking to purchase the export, compared to what they spend to buy the import. Therefore, a positive net trade balance strengthens the AUD and has the opposite effect if the trade balance is negative.
