AUD/USD holds key support level of 0.6450 as RBA dovish bets cool down
- AUD/USD continues to hold 0.6450 as the Australian Dollar outperforms its peers.
- Escalating Australian CPI has pushed back RBA dovish bets.
- US employers laid off over 153K workers in October.
The AUD/USD pair stays above its key support level of 0.6450 from Wednesday. During the European trading session on Friday, the Aussie pair trades 0.1% higher to near 0.6490 as the Australian Dollar (AUD) outperforms its peers.
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 New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.04% | 0.21% | 0.18% | -0.04% | -0.09% | 0.32% | 0.09% | |
| EUR | 0.04% | 0.25% | 0.23% | 0.00% | -0.04% | 0.35% | 0.12% | |
| GBP | -0.21% | -0.25% | -0.02% | -0.27% | -0.29% | 0.11% | -0.12% | |
| JPY | -0.18% | -0.23% | 0.02% | -0.19% | -0.25% | 0.13% | -0.08% | |
| CAD | 0.04% | -0.00% | 0.27% | 0.19% | -0.05% | 0.33% | 0.12% | |
| AUD | 0.09% | 0.04% | 0.29% | 0.25% | 0.05% | 0.40% | 0.17% | |
| NZD | -0.32% | -0.35% | -0.11% | -0.13% | -0.33% | -0.40% | -0.23% | |
| CHF | -0.09% | -0.12% | 0.12% | 0.08% | -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).
The Australian Dollar trades firmly amid increasing doubts about whether the Reserve Bank of Australia (RBA) will cut interest rates further this year.
RBA dovish bets have cooled down as inflation is Australia is proving to be stronger despite the maintenance of a restrictive monetary policy. In the third quarter, the Australian Consumer Price Index (CPI) grew at a faster pace of 1.3% on a quarterly basis, faster than the prior reading of 0.7%.
In the monetary policy announcement this week, RBA Governor Michele Bullock also stated that officials didn’t discuss about reducing interest rates.
Meanwhile, the US Dollar (USD) trades cautiously as escalating United States (US) job cut trend due to rising Artificial Intelligence (AI) adoption has raised concerns over the economic outlook.
The US Challengers report showed on Thursday that employers laid off 153,074 workers in October. The figure was 183% higher from numbers seen in September and 175% higher than the same month a year ago.
US labor market concerns have slightly pushed expectations of an interest rate cut by the Federal Reserve (Fed) for the December policy meeting.
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
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