Market Data 
- The Australian Dollar may decline due to market caution ahead of the US November Consumer Price Index data.
- The AUD depreciated after the RBA maintained its interest rates at 4.35% in December.
- The US CPI and core inflation are estimated to rise to 2.7% and 3.3%, respectively, year-over-year in November.
The Australian Dollar (AUD) hovers against the US Dollar (USD) on Wednesday after experiencing losses in the previous session. The AUD/USD pair faced challenges, driven by the broadly stronger US dollar (USD). Traders now focus on the release of crucial US November Consumer Price Index (CPI) data, which are expected to be released later in the North American session.
The US CPI inflation is estimated to rise to 2.7% YoY in November from 2.6% in October. Meanwhile, the core CPI, excluding Food & Energy, is expected to increase 3.3% YoY. Any indications of stalled progress could significantly diminish the likelihood of a Federal Reserve’s (Fed) rate cut, potentially boosting the US Dollar. Traders are now pricing in nearly an 85.8% chance of Fed rate reductions by 25 basis points on December 18, according to the CME FedWatch Tool.
The AUD received downward pressure after the Reserve Bank of Australia’s (RBA) decision to keep the Official Cash Rate (OCR) unchanged at 4.35% in its final policy meeting in December. RBA Governor Michele Bullock highlighted that while upside inflation risks have eased, they persist and require ongoing vigilance. The RBA will closely monitor all economic data, including employment figures, to guide future policy decisions.
Australian Dollar declined after the RBA decision to keep interest rates unchanged
- China President Xi Jinping stated on Tuesday, “China has full confidence in achieving this year’s economic target.” Xi emphasized that China will continue to serve as the largest engine of global economic growth and asserted that there would be no winners in tariff wars, trade wars, or tech wars.
- China’s Trade Balance (CNY) increased to CNY 692.8 billion in November, up from CNY 679.1 billion in the previous month. Exports grew by 1.5% year-over-year in November, compared to the 11.2% rise in October. Meanwhile, imports increased by 1.2% YoY, recovering from the 3.7% decline recorded earlier.
- The Australian Unemployment Rate remained at 4.1% in October for the third consecutive month. The economy added 9,700 full-time jobs and 6,200 part-time roles, making a net change of 15,900 positions.
- The RBA’s closely watched inflation gauge, the annual Trimmed Mean Consumer Price Index (CPI), slowed to 3.5% from 4.0% in the third quarter but stayed well above the Bank’s 2%- 3% target.
- Australia’s economy grew at its slowest annual pace since the pandemic in the third quarter. The OZ nation’s Gross Domestic Product (GDP) rose 0.3% in the September quarter, missing market forecasts of 0.4%. Weaker-than-expected GDP growth made markets almost fully price in a rate cut next April at 96% (from 73% before), according to Refinitive interest rate probabilities data.
- US November NFP data from Friday showed a robust 227,000 gain, well above expectations, and stable Average Hourly Earnings growth at 0.4% MoM.
- The AUD received support from improved sentiment and stimulus expectations from China. China’s leaders announced plans for proactive fiscal and looser monetary policies to accelerate domestic consumption in 2024.
- Weak Chinese CPI data (-0.6% in November, worse than expected) highlights challenges in the recovery but bolsters stimulus speculation.
Technical Analysis: Australian Dollar falls towards 0.6350 near yearly lows
AUD/USD trades near 0.6370 on Wednesday. The technical analysis of a daily chart shows strengthening bearish momentum as the pair moves downwards within a descending channel pattern. Additionally, the 14-day Relative Strength Index (RSI) is positioned slightly above 30, indicating sustained negative sentiment.
The immediate support appears around its yearly low of 0.6348, last seen on August 5. A break below this level could strengthen the bearish bias and put downward pressure on the AUD/USD pair to navigate the region around the descending channel’s lower boundary at 0.6220 level.
On the upside, the AUD/USD pair may find initial resistance around the nine-day Exponential Moving Average (EMA) at 0.6428, followed by the 14-day EMA at 0.6449, which aligns closely with the upper boundary of the descending channel. A decisive breakout above this channel could pave the way for a potential rally toward the seven-week high of 0.6687.
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 | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.06% | -0.04% | -0.11% | -0.05% | -0.01% | -0.02% | 0.01% | |
| EUR | 0.06% | 0.03% | -0.03% | 0.02% | 0.05% | 0.04% | 0.07% | |
| GBP | 0.04% | -0.03% | -0.08% | -0.01% | 0.03% | 0.02% | 0.05% | |
| JPY | 0.11% | 0.03% | 0.08% | 0.06% | 0.10% | 0.08% | 0.12% | |
| CAD | 0.05% | -0.02% | 0.00% | -0.06% | 0.04% | 0.03% | 0.05% | |
| AUD | 0.01% | -0.05% | -0.03% | -0.10% | -0.04% | -0.01% | 0.02% | |
| NZD | 0.02% | -0.04% | -0.02% | -0.08% | -0.03% | 0.00% | 0.03% | |
| CHF | -0.01% | -0.07% | -0.05% | -0.12% | -0.05% | -0.02% | -0.03% |
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).
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.
