- The AUD/USD pair rose following comments from former Reserve Bank of Australia (RBA) Governor Bernie Fraser.
- Bernie Fraser criticised the Reserve Bank of Australia's board for placing too much emphasis on inflation at the expense of the jobs market.
- Australian consumer inflation expectations eased to 4.4% in September, down slightly from a four-month high of 4.5% in August.
The AUD/USD pair rose after Australia released weak consumer inflation expectations on Thursday. Additionally, former Reserve Bank of Australia (RBA) Governor Bernie Fraser criticized the current RBA board for placing too much emphasis on inflation at the expense of the job market. Fraser warned of a “recession risk” that could have serious implications on employment and suggested the board should cut interest rates.
The Australian Dollar (AUD) gained support against the US Dollar (USD) as risk sentiment improved following the release of the US Inflation Report on Wednesday. US Consumer Price Index (CPI) data for August showed that headline inflation fell to a three-year low, while core inflation beat expectations. This development raised the likelihood that the Federal Reserve (Fed) will begin an easing cycle with a 25 basis points interest rate cut in September. Investors are keeping an eye on US Producer Price Index (PPI) and initial jobless claims data due on Thursday for further insights.
Sarah Hunter, deputy governor of the Reserve Bank of Australia (RBA) for economics, said on Wednesday that high interest rates are suppressing demand, which is expected to lead to a mild recession. Hunter also noted that the labour market remains tight compared to full employment levels, and job growth is expected to continue, albeit slower than population growth, according to Reuters.
Daily Digest Market Trends: Australian dollar remains firm on improving risk sentiment
- According to the CME FedWatch tool, the market fully expects the Federal Reserve to cut interest rates by at least 25 basis points (bps) at its September meeting, with the likelihood of a 50 bps cut plummeting to 15.0% from 44.0% a week ago.
- Australian consumer inflation expectations eased to 4.4% in September, down slightly from a four-month high of 4.5% in August. The decline highlights the central bank's efforts to strike a balance between lowering inflation within a reasonable timeframe and preserving gains in the labour market.
- The U.S. Consumer Price Index fell 2.5% year-on-year in August from 2.9% previously. The index was below the 2.6% forecast. Meanwhile, the headline CPI was up 0.2% month-on-month.
- U.S. core CPI, excluding food and energy, was stable at 3.2% year-on-year. On a monthly basis, core CPI rose to 0.3% from 0.2% in the previous month.
- According to a CNN poll, the first US presidential debate between former President Donald Trump and Democratic candidate Kamala Harris in Pennsylvania was won by Harris, who began the debate with a critical focus on the economy, inflation and economic policy.
- Robin Xin, chief China economist at Morgan Stanley, said China is definitely experiencing deflation and is probably in the second stage of the process. Xin noted that Japan's experience shows that the longer deflation continues, the greater the need for China to implement large-scale stimulus measures to overcome the challenge of debt deflation (Business Standard).
- Australia's Westpac consumer confidence index fell 0.5% month-on-month in September, down from a 2.8% rise in August.
- China reported a trade surplus of 649.34 billion yuan in August, up from 601.9 billion yuan in the previous report. Meanwhile, China's exports (yuan) increased 8.4% year-on-year, following a 6.5% increase in the previous report.
Technical reasons why: AUD rises above 0.6650, the next barrier is the 9-day EMA
On Thursday, the AUD/USD pair is trading near 0.6680 with technical analysis on the daily chart showing that it is stuck inside a descending channel, indicating weakness, while the 14-day Relative Strength Index (RSI) is below the 50 level, confirming the continuation of the bearish trend.
On the downside, the AUD/USD pair is likely to target the lower limit of the descending channel around 0.6600. A breakdown below this level will strengthen the bearish outlook and the pair can head towards the throwback support zone around 0.6575.
On the upside, the AUD/USD pair may face resistance near the 9-day exponential moving average (EMA) at 0.6694 and then the upper limit of the descending channel around 0.6720. A break above this upper limit will weaken the bearish bias and potentially lead to a retest of the seven-month high of 0.6798, last recorded on July 11th.
AUD/USD: Daily Chart
Today's price of the Australian dollar
The table below shows the percentage movement of the Australian Dollar (AUD) against the major listed currencies today: The Australian Dollar was strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | Australian Dollar | NZD | Swiss Franc | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.04% | -0.04% | 0.24% | -0.05% | -0.24% | -0.25% | 0.11% | |
| EUR | 0.04% | 0.01% | 0.30% | 0.01% | -0.20% | -0.21% | 0.14% | |
| GBP | 0.04% | -0.01% | 0.00% | 0.01% | -0.20% | -0.21% | 0.14% | |
| JPY | -0.24% | -0.30% | 0.00% | -0.28% | -0.49% | -0.53% | -0.14% | |
| CAD | 0.05% | -0.01% | -0.01% | 0.28% | -0.20% | -0.23% | 0.13% | |
| Australian Dollar | 0.24% | 0.20% | 0.20% | 0.49% | 0.20% | -0.01% | 0.33% | |
| NZD | 0.25% | 0.21% | 0.21% | 0.53% | 0.23% | 0.00% | 0.36% | |
| Swiss Franc | -0.11% | -0.14% | -0.14% | 0.14% | -0.13% | -0.33% | -0.36% |
The heat map displays 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 the Australian Dollar from the left column and move it along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).
