- The Australian dollar continues to strengthen following Tuesday's release of building permit statistics.
- The total number of approved homes in Australia (seasonally adjusted) decreased by 3.6% month-on-month to 14,998 in November 2024.
- Traders are awaiting the release of the US ISM Services PMI later in the North American session.
The Australian dollar (AUD) rose against the US dollar (USD) for the fourth consecutive session on Tuesday. AUD/USD continues to strengthen despite lower-than-expected building permit numbers in November. The US ISM Services Purchasing Managers' Index (PMI) is expected to be released later in the day. Markets on Wednesday will focus on the minutes of the Federal Reserve's December policy meeting.
The number of new construction projects approved in Australia in November 2024 decreased by 3.6% from the previous month to 14,998 units, falling short of the market forecast for a 1.0% decline. This decline was the first decline in three months, following an upwardly revised 5.2% increase in October.
All eyes will be on Australia's monthly consumer price index (CPI) for November, scheduled for Wednesday. If the data is lower than market expectations, the Reserve Bank of Australia (RBA) is more likely to cut interest rates at its February meeting, potentially weighing on the Australian dollar.
Officials from the People's Bank of China (PBOC), National Development and Reform Commission (NDRC), and Ministry of Finance (MoF) are scheduled to hold a press conference on Wednesday to discuss expanding the consumer goods trade-in program.
Australian dollar gains despite hawkish change in Fed policy outlook
- The US Dollar Index (DXY), which measures the performance of the US dollar (USD) against six major currencies, has been slowly rising to near 108.00 at the time of writing.
- The US ISM Manufacturing PMI in December was 49.3, an improvement from 48.4 in November. This number exceeded market expectations of 48.4.
- Richmond Fed President Thomas Barkin stressed on Friday that benchmark interest rates should remain subdued until there is greater confidence that inflation is on track to return to its 2% target.
- Federal Reserve President Adriana Kugler and San Francisco Federal Reserve President Mary Daley highlighted the difficult balancing act facing U.S. central bankers as they seek to slow the pace of monetary easing this year.
- Traders are wary of President-elect Trump's economic policies, worried that tariffs could raise the cost of living. These concerns were further exacerbated by the Federal Open Market Committee's (FOMC) recent outlook, which suggested fewer interest rate cuts in 2025, reflecting caution against a backdrop of persistent inflationary pressures.
- The Australian Judo Bank Composite PMI for December 2024 was revised upward to 50.2 from the previous 49.9, indicating private sector production has increased slightly for the third consecutive month. This expansion was driven by the services sector as manufacturing production continued to contract. Meanwhile, the services PMI was revised upward to 50.8 from 50.5 in November, marking the 11th consecutive month of growth in the services sector.
- The Caixin China Services Purchasing Managers' Index (PMI) for December 2024 was 52.2, up from 51.5 in November and higher than the market estimate of 51.7. This was the highest growth rate in the services sector since May. Meanwhile, the December Caixin manufacturing PMI announced on Thursday was 50.5, an unexpected drop from November's 51.5 and below market expectations of 51.7.
- According to Reuters, the Shanghai Stock Exchange pledged to deepen the opening of its capital markets in a meeting with foreign institutions. Strong fundamentals support China's economy, demonstrating resilience in a complex global environment.
- The Financial Times reported on Friday that the People's Bank of China (Central Bank) expects to cut interest rates at the appropriate time this year. Given the close trade relationship between the two countries, fluctuations in the Chinese economy often have a noticeable impact on the Australian market.
Australian dollar rises to near the top of descending channel
AUD/USD was trading around 0.6250 on Tuesday, confined within a descending channel on the daily chart, maintaining a bearish outlook. However, the 14-day relative strength index (RSI) is rising towards the 50 level, indicating that the bearish momentum may weaken.
On the upside, AUD/USD may test the upper bound of the descending channel near the psychological mark of 0.6280.
In terms of support, the AUD/USD pair coincides with the 14-day exponential moving average (EMA) at 0.6245 and then with the 9-day EMA at 0.6229. Further support area appears around the lower limit of the descending channel, around the 0.6000 level.
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 Japanese yen.
| USD | EUR | GBP | JPY | CAD | australian dollar | new zealand dollar | swiss franc | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.08% | -0.15% | 0.16% | -0.12% | -0.38% | -0.45% | -0.07% | |
| EUR | 0.08% | -0.06% | 0.21% | -0.04% | -0.30% | -0.37% | -0.00% | |
| GBP | 0.15% | 0.06% | 0.32% | 0.02% | -0.24% | -0.31% | 0.06% | |
| JPY | -0.16% | -0.21% | -0.32% | -0.27% | -0.54% | -0.62% | -0.24% | |
| CAD | 0.12% | 0.04% | -0.02% | 0.27% | -0.26% | -0.33% | 0.04% | |
| australian dollar | 0.38% | 0.30% | 0.24% | 0.54% | 0.26% | -0.07% | 0.30% | |
| new zealand dollar | 0.45% | 0.37% | 0.31% | 0.62% | 0.33% | 0.07% | 0.37% | |
| swiss franc | 0.07% | 0.00% | -0.06% | 0.24% | -0.04% | -0.30% | -0.37% |
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).
economic indicators
ISM Service PMI
of Institute of Supply Management (ISM) The Services Purchasing Managers Index (PMI), released monthly, is a leading indicator that measures business activity in the U.S. service sector, which accounts for the majority of the economy. This metric is derived from a survey of supplier executives across the United States, based on information collected within each organization. Survey responses will reflect any changes from the current month compared to the previous month. A reading above 50 indicates general expansion in the service economy, which is a bullish sign for the US dollar (USD). A reading below 50 indicates a general decline in service sector activity, which is considered bearish for the USD.
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.
