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  • Australian Dollar lost its intraday gains after the release of weaker employment data.
  • Australia Unemployment Rate rose by 4.1% from 3.9% prior, exceeding the expected 4.0% in January.
  • AUD received support from the improved Australian ASX 200 Index.
  • US Dollar depreciates due to the decline in the US Treasury yields.

The Australian Dollar (AUD) relinquished its intraday gains and slipped into negative territory following the release of downbeat Australian Employment data on Thursday. However, the AUD/USD pair managed to advance during early Asian hours on Thursday, supported by a weakening US Dollar (USD) and improved risk appetite in the market.

Australian Dollar found some upward momentum as the S&P/ASX 200 Index surged above 7,600 on Thursday, mirroring a rebound in Wall Street overnight. Strong corporate earnings and an optimistic corporate outlook overshadowed concerns about inflation and interest rates. Reserve Bank of Australia Governor Michele Bullock addressed Parliament, highlighting persistent inflation, particularly in services, but also noted a gradual decline in inflationary pressures.

The US Dollar Index (DXY) encountered difficulties amid subdued US Treasury yields, reflecting a significant shift in market sentiment. Expectations for no rate adjustment by the Federal Reserve (Fed) in the upcoming March meeting surged to nearly 90%. According to the FedWatch Tool, investors are now pricing in a modest 37% probability of a rate cut in May, with the likelihood of a 25 basis points (bps) rate cut increasing to approximately 53% in May.

Daily Digest Market Movers: Australian Dollar loses ground on weaker employment data

  • Australia’s seasonally adjusted Employment Change printed the reading of 0.5K for January, against the market expectation of 30K.
  • Aussie Part-Time Employment came in at 10.6K as compared to the previous figure of 46.7K.
  • Australian Participation Rate remained consistent at 66.8%, lower than the anticipated 66.9% in January.
  • January’s Full-Time Employment improved to 11.1K from the previous decline of 109.4K.
  • Australia’s Consumer Inflation Expectations data is unchanged at 4.5% for February.
  • Reserve Bank of Australia Governor Michele Bullock addressed the Australian parliament’s Senate Economics Legislation Committee, noting that the global economy has fared better than initially anticipated. She expressed previous concerns about potential hard landings and recessions but indicated that the economy is currently in a favorable position to bring inflation down within a reasonable timeframe.
  • Federal Reserve (Fed) Vice Chair for Supervision Michael Barr made headlines late Wednesday, affirming that both the Fed and its core Federal Open Market Committee (FOMC) maintain confidence in the trajectory of US inflation toward the Fed’s 2% target.
  • US headline Consumer Price Index (CPI) increased by 3.1% in January, exceeding the expected 2.9% but lower than the previous rate of 3.4%.
  • US Inflation rose by 0.3% month-over-month, against the expectation of maintaining the previous reading of 0.2%.
  • US Core CPI (YoY) remained consistent at 3.9% against the market expectation of a decline to 3.7% in January.
  • US Core Inflation (MoM) increased by 0.4% against the 0.3% as expected to be unchanged in January.

Technical Analysis: Australian Dollar hovers below the psychological barrier of 0.6500

The Australian Dollar trades near 0.6490 on Thursday following the next major support at 0.6450 before the weekly low at 0.6442. A break below this level could push the AUD/USD pair to navigate the region around the psychological support of the 0.6400 level. On the upside, the AUD/USD pair faces a significant resistance level at the psychological threshold of 0.6500. If this level is breached, it could potentially propel the AUD/USD pair toward the 14-day Exponential Moving Average (EMA) located at 0.6522. Further upward movement may target the 23.6% Fibonacci retracement level at 0.6543, followed by the major resistance level at 0.6550.

AUD/USD: Daily Chart

Australian Dollar price today

The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the weakest against the Japanese Yen.

USD   0.02% 0.00% 0.02% 0.24% -0.20% 0.07% 0.02%
EUR -0.02%   -0.03% 0.01% 0.20% -0.21% 0.05% 0.01%
GBP 0.01% 0.01%   0.03% 0.20% -0.20% 0.05% 0.02%
CAD -0.03% -0.01% -0.02%   0.20% -0.23% 0.04% 0.00%
AUD -0.20% -0.20% -0.21% -0.19%   -0.42% -0.15% -0.18%
JPY 0.20% 0.23% 0.19% 0.23% 0.41%   0.27% 0.22%
NZD -0.06% -0.05% -0.06% -0.04% 0.17% -0.26%   -0.04%
CHF -0.02% 0.00% -0.02% 0.01% 0.22% -0.22% 0.05%  

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).

Australian Dollar FAQs

One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.

The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.

China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.

Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.

The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.


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