Australian Dollar Strengthens Amid Economic Signals

• The Australian Dollar is bolstered by reduced expectations of further RBA rate cuts.
• Westpac’s consumer confidence in Australia dips 3.1% to 95.4 in September from 98.5 in August.
• The US dollar continues to weaken as speculation on Federal Reserve rate cuts rises.

The Australian Dollar (AUD) is gaining traction against the US Dollar (USD) this Tuesday, marking its third consecutive day of appreciation. The recent decline in Westpac’s consumer confidence, which fell 3.1% in September to 95.4, heightens concerns over the economic outlook, contrasting with a higher figure of 98.5 in August. Today’s attention will turn towards the US non-farm payroll revisions expected to be released later.

Matthew Hassan, who leads macro forecasting in Australia, notes a slowdown in consumer recovery since mid-2024. He believes the Reserve Bank of Australia (RBA) might have to consider further policy easing. He forecasts a 25 basis point rate cut in November, followed by potential cuts continuing into 2026.

Nevertheless, the AUD has found support amid decreased expectations for additional interest rate cuts by the RBA. Coupled with a solid trade surplus in July and positive GDP figures released last week, the outlook appears more stable despite recent inflationary pressures. Current swaps indicate an 84% probability that the RBA will maintain its stance in September, with the likelihood of a 25 basis point rate cut in November reduced from 100% to 80%.

US Dollar Faces Challenges as Fed Speculation Grows

• The US Dollar Index (DXY), which gauges the dollar’s strength against six major currencies, struggles around 97.40 amidst predictions of a weakening labor market.
• The CME FedWatch tool suggests nearly 90% probability for a 25 basis point rate cut at the Fed’s policy meeting in September, up from 86% the previous week.
• Chicago Fed President Austan Goolsbee mentioned on Bloomberg TV that it’s uncertain if September is the right moment for rate cuts, particularly given recent employment data.
• The U.S. Bureau of Labor Statistics reported that non-farm payroll employment rose by only 22,000 in August, far short of the expected 75,000, following a revised increase of 79,000 in July.
• China’s trade balance improved to 73.29 billion CNY in August, up from 70.518 billion, with exports increasing by 4.8%.
• Australia’s trade balance also rose to $700 million in July, with a trade surplus that exceeded expectations, coupled with GDP growth of 0.6% for the quarter.
• The monthly consumer price index in Australia jumped 2.8% year-on-year in July, surpassing both the previous increase and forecast.

AUD Approaches Key Levels as Bullish Trend Continues

The AUD/USD pair is trading around 0.6590 on Tuesday. According to daily technical analysis, the pair is moving upward within a rising channel, showcasing a bullish bias. Its position above the nine-day exponential moving average (EMA) also indicates robust short-term momentum.

On the flip side, the pair is aiming for the upward channel cap of 0.6620, marking the highest point since July 24th. A break above this significant resistance would further reinforce a bullish trend. Initial support lies at the nine-day EMA of 0.6551, which aligns with the lower boundary of the rising channel at 0.6540. If it falls below this threshold, the bullish outlook could diminish, leading the pair towards testing the 50-day EMA at 0.6511.

AUD/USD: Daily Chart Summary

The Australian dollar is performing strongly today against major currencies, particularly the Canadian dollar.

This table displays the changes in the Australian Dollar (AUD) against the listed major currencies, reflecting its current trend in the forex market.