- The Australian dollar has stalled while the US dollar has stabilized.
- Australian consumer confidence rose 6.2% to 86 in February.
- The U.S. dollar is holding steady despite low U.S. bond yields.
- January US CPI year-over-year and month-over-month changes are likely to slow to 3.0% and 0.2%, respectively.
Despite the release of improved Australian consumer confidence data on Tuesday, the Australian dollar (AUD) has retreated after posting gains in the past two sessions. Westpac Melbourne Research’s Consumer Sentiment Index rose 6.2% to 86 in February from 81 in January, its highest level in 20 months. However, the index has remained below the neutral level of 100 since February 2022.
The Australian dollar is facing downward pressure as Australia’s inflation slows, with markets widely believing the Reserve Bank of Australia (RBA) has ended its monetary tightening cycle. This downward trend in the Australian dollar is weighing on the Australian dollar/US dollar pair. Additionally, a decline in the Australian money market could further constrain the Australian dollar’s performance.
The U.S. dollar index (DXY) has remained stable after its recent rally, with lower U.S. Treasury yields capping the strength of the U.S. dollar (USD). Market sentiment was mixed as traders were on alert ahead of the release of key U.S. inflation data scheduled for Tuesday, which could impact interest rate expectations.
Daily Digest Market Movers: Australian dollar falls as US dollar stabilizes
- National Australia Bank’s business confidence improved to 1 in January from 0, which was flat last time.
- National Australia Bank’s business performance in January fell to 6 from 8 previously.
- Marion Kohler, head of economic analysis at the RBA, highlighted the uncertainty surrounding the current inflation forecast for the Australian economy. But ultimately, he expects price increases to return to more moderate levels by 2025.
- The Commonwealth Bank of Australia (CBA) expects to cut its benchmark interest rate by 75 basis points in 2024, with the first reduction expected in September.
- China’s headline CPI fell by 0.8%, higher than the expected 0.5% decline and the previous 0.3% decline.
- Federal Reserve Bank of Dallas President Laurie K. Logan said Friday that there is no pressing need to lower interest rates at this time. He acknowledged the “tremendous progress” in curbing inflation, but stressed the need for additional evidence to ensure the sustainability of this progress.
- In the United States’ monthly budget report, the forecast for January was -$21 billion, or -$129 billion, but the budget for January was announced as -$22 billion.
- Three-month and six-month U.S. Treasury bills were bid at interest rates of 5.23% and 5.065%, respectively.
Technical analysis: Australian dollar trades near 0.6530 before 14-day EMA
The Australian dollar was trading around $0.6520 on Tuesday, below the 14-day exponential moving average (EMA) immediate resistance of $0.6544 and in line with the key barrier at the 0.6550 level. There is. If this key level is broken, the AUD/USD pair could target key levels such as the 23.6% Fibonacci retracement level at 0.6563 and psychological resistance at 0.6600. On the downside, the psychological level of 0.6500 may act as support for the time being. A break below the latter could see the AUD/USD pair re-approach last week’s low at 0.6468, before returning to the key support level at 0.6450.
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 weakest against the US dollar.
| USD | EUR | GBP | CAD | australian dollar | JPY | new zealand dollar | Swiss franc | |
| USD | 0.10% | 0.12% | 0.04% | 0.17% | 0.10% | 0.50% | 0.11% | |
| EUR | -0.09% | 0.03% | -0.05% | 0.06% | 0.00% | 0.39% | 0.00% | |
| GBP | -0.12% | -0.03% | -0.09% | 0.03% | -0.02% | 0.37% | -0.04% | |
| CAD | -0.04% | 0.05% | 0.08% | 0.10% | 0.06% | 0.45% | 0.05% | |
| australian dollar | -0.17% | -0.06% | -0.04% | -0.11% | -0.06% | 0.33% | -0.04% | |
| JPY | -0.10% | 0.00% | 0.02% | -0.06% | 0.08% | 0.39% | -0.01% | |
| new zealand dollar | -0.50% | -0.40% | -0.38% | -0.46% | -0.34% | -0.40% | -0.41% | |
| Swiss franc | -0.09% | 0.00% | 0.03% | -0.04% | 0.04% | 0.01% | 0.40% |
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 Euro from the left column and move along the horizontal line to Japanese Yen, the percentage change displayed in the box represents EUR (base)/JPY (estimate).
RBA FAQ
The Reserve Bank of Australia (RBA) sets Australia’s interest rates and controls monetary policy. Decisions are made at the Board of Directors’ meetings held 11 times a year and at extraordinary emergency meetings as necessary. The RBA’s primary mission is to maintain price stability, or an inflation rate of 2% to 3%, but it also “contributes to monetary stability, full employment, economic prosperity and the well-being of Australians”. The main means of achieving this is by raising or lowering interest rates. If interest rates are relatively high, the Australian dollar (AUD) will appreciate, and vice versa. Other RBA tools include quantitative easing and monetary tightening.
Inflation has traditionally always been considered a negative factor for currencies, as it generally reduces the value of money, but in modern times, with the relaxation of cross-border capital controls, the opposite is actually true. Masu. Currently, with inflation rising slowly, central banks are likely to raise interest rates, which in turn has the effect of further capital inflows from global investors looking for a lucrative place to park their funds. . This increases the demand for the local currency (in the case of Australia, the Australian dollar).
Macroeconomic data assesses the health of an economy and can influence the value of a currency. Investors prefer to invest their capital in safe and growing economies than in unstable and shrinking economies. Increased capital inflows increase the aggregate demand and value of the domestic currency. Classic indicators such as GDP, manufacturing and services PMI, employment and consumer sentiment surveys can influence the Australian dollar. A strong economy could prompt the Reserve Bank of Australia to raise interest rates, which could also support the Australian dollar.
Quantitative easing (QE) is a tool used in extreme situations where lower interest rates alone are not sufficient to restore credit flow to the economy. QE is a process in which the Reserve Bank of Australia (RBA) prints Australian dollars (AUD) for the purpose of purchasing assets (usually government and corporate bonds) from financial institutions, providing them with the liquidity they need. QE typically results in a weaker Australian dollar.
Quantitative tightening (QT) is the opposite of QE. This is done after quantitative easing, when economic recovery is underway and inflation begins to rise. In QE, the Reserve Bank of Australia (RBA) purchases government and corporate bonds from financial institutions to provide liquidity, whereas in QT, the RBA stops purchasing further assets and limits the maturities of bonds it already owns. Stop reinvesting the principal that has arrived. That would be positive (or bullish) for the Australian dollar.
