- The Australian Dollar holds ground amid China’s fresh stimulus measures.
- Australia’s Monthly Consumer Price Index increased 2.7% YoY in August, falling short of expected 2.8% rise and previous 3.5% rise.
- PBOC’s Gongsheng announced to reduce the RRR by 50 basis points and the seven-day repo rate from 1.7% to 1.5%.
The Australian Dollar (AUD) pares its intraday gains against the US Dollar (USD) but holds minor gains after a weaker-than-expected Monthly Consumer Price Index report on Wednesday. However, the commodity-linked Aussie found support as China, its largest trading partner, announced a new round of stimulus measures.
The Reserve Bank of Australia (RBA) held the Official Cash Rate (OCR) steady at 4.35% on Tuesday, offering support to the Australian Dollar and bolstering the AUD/USD pair. During the press conference following the policy decision, RBA Governor Michele Bullock confirmed that rates will remain on hold for now and clarified that a rate hike was not explicitly considered during the meeting.
People’s Bank of China (PBOC) Governor Pan Gongsheng announced on Tuesday that China will reduce the reserve requirement ratio (RRR) by 50 basis points (bps). Gongsheng also noted that the central bank would lower the seven-day repo rate from 1.7% to 1.5%, and reduce the down payment for second homes from 25% to 15%. Additionally, the PBOC cut the one-year Medium-term Lending Facility (MLF) rate from 2.30% to 2.0% on Thursday, following the last reduction in July 2024, when the rate was lowered from 2.50%.
Daily Digest Market Movers: Australian Dollar remains solid due to a hawkish RBA
- In a recent note, JP Morgan advised investors to monitor commodities and bond yields in light of the positive market outlook following China’s stimulus proposals on Tuesday. The bank emphasized that global growth has received a new boost from China, a factor that has been lacking in recent years. This development notably reduces the risk of a recession and is seen as favorable for the markets. However, JP Morgan also cautioned about the potential risk of reinflation.
- Australia’s Monthly Consumer Price Index rose 2.7% year-over-year in August, down from the previous 3.5% rise and expected 2.8% increase.
- Federal Reserve Governor Michelle Bowman stated on Tuesday that key inflation indicators are still “uncomfortably above” the 2% target, urging caution as the Fed moves forward with interest rate cuts. Despite this, she expressed a preference for a more conventional approach, advocating for a quarter percentage point reduction.
- US Consumer Confidence Index fell to 98.7 in September from a revised 105.6 in August. This figure registered the biggest decline since August 2021.
- The ANZ-Roy Morgan Australia Consumer Confidence Index rose by 0.8 points to 84.9 this week. Despite this increase, Consumer Confidence has now remained below the 85.0 mark for 86 consecutive weeks. On a year-over-year basis, the index is up by 8.5 points from 76.4.
- The S&P Global US Composite Purchasing Managers Index (PMI) grew at a slower rate in September, registering 54.4 compared to 54.6 in August. The Manufacturing PMI unexpectedly dropped to 47.0, indicating contraction, while the Services PMI expanded more than anticipated, reaching 55.4.
- Chicago Fed President Austan Goolsbee noted, “Many more rate cuts are likely needed over the next year, rates need to come down significantly.” Additionally, Atlanta Fed President Raphael Bostic said Monday that the US economy is close to normal rates of inflation and unemployment and the central bank needs monetary policy to “normalize” as well, per Reuters.
- Australia’s Judo Bank Composite PMI declined to 49.8 in September from 51.7 in August, indicating a contraction in business activity as slower growth in the services sector was unable to counterbalance a deeper slump in manufacturing output. The Services PMI fell to 50.6 in September from 52.5 previously, while the Manufacturing PMI decreased to 46.7 from 48.5 in August.
Technical Analysis: Australian Dollar rises to near 0.6900, upper boundary of the ascending channel
The AUD/USD pair trades near 0.6890 on Wednesday. Technical analysis of the daily chart indicates that the pair is moving upward within the ascending channel pattern, suggesting a bullish bias. Additionally, the 14-day Relative Strength Index (RSI) has advanced towards the 70 mark, suggesting upward gains remain probable but could face a consolidation soon.
In terms of resistance, the AUD/USD pair could test the upper boundary of the ascending channel, around the 0.6930 level, followed by the psychological level of 0.6950.
The AUD/USD pair could find support at the lower boundary of the ascending channel, which coincides with the nine-day Exponential Moving Average (EMA) at 0.6816. The next significant support is at the psychological level of 0.6700. A break below this level could push the pair further down toward its six-week low of 0.6622.
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 strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.16% | -0.08% | 0.10% | -0.05% | 0.00% | 0.04% | -0.17% | |
| EUR | 0.16% | 0.08% | 0.31% | 0.12% | 0.17% | 0.22% | -0.02% | |
| GBP | 0.08% | -0.08% | 0.19% | 0.05% | 0.08% | 0.11% | -0.09% | |
| JPY | -0.10% | -0.31% | -0.19% | -0.18% | -0.13% | -0.08% | -0.30% | |
| CAD | 0.05% | -0.12% | -0.05% | 0.18% | 0.05% | 0.10% | -0.12% | |
| AUD | -0.00% | -0.17% | -0.08% | 0.13% | -0.05% | 0.06% | -0.17% | |
| NZD | -0.04% | -0.22% | -0.11% | 0.08% | -0.10% | -0.06% | -0.23% | |
| CHF | 0.17% | 0.02% | 0.09% | 0.30% | 0.12% | 0.17% | 0.23% |
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 Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).
Economic Indicator
Monthly Consumer Price Index (YoY)
The Monthly Consumer Price Index (CPI), released by the Australian Bureau of Statistics on a monthly basis, measures the changes in the price of a fixed basket of goods and services acquired by household consumers. The indicator was developed to provide inflation data at a higher frequency than the quarterly CPI. The YoY reading compares prices in the reference month to the same month a year earlier. A high reading is seen as bullish for the Australian Dollar (AUD), while a low reading is seen as bearish.
