Australian Dollar loses ground as US Dollar extends gains
- The Australian Dollar struggles following the release of weaker housing data on Wednesday.
- Australia’s Private house approvals fell by 2.6% MoM, while the seasonally adjusted Building Permits fell by 6% MoM in August.
- The US Dollar extends its gains despite rising Fed rate cut bets and the ongoing government shutdown.
The Australian Dollar (AUD) declines against the US Dollar (USD) on Wednesday, extending its losses for the second successive session. The AUD/USD pair weakened amid investment outflows, as the S&P/ASX 200 slipped 0.14% to trade below 8,950 at the time of writing, pressured by losses in technology and gold stocks.
The AUD also faces challenges after weaker housing data was released on Wednesday. Private house approvals in Australia declined by 2.6% month-over-month (MoM) to 9,027 units in August, as expected, and reversing a 1.3% rise in the previous month. Meanwhile, the seasonally adjusted Building Permits fell by 6% MoM to 14,744 units, following a 10% decrease previously, marking the second consecutive monthly decline.
The downside of the AUD/USD pair could be restrained as the Australian Dollar (AUD) could receive support from the cautious stance surrounding the Reserve Bank of Australia (RBA). The Australian central bank is expected to maintain its interest rates after deciding to keep its Official Cash Rate (OCR) unchanged at 3.6% in September. The RBA warned that inflation has proven more persistent than expected, especially in market services, while the labor market remains tight.
Australian Dollar declines as US Dollar extends gains despite government shutdown
- The US Dollar Index (DXY), which measures the value of the US Dollar against six major currencies, is gaining ground for the third successive day and trading around 98.80 at the time of writing. Federal Open Market Committee (FOMC) Meeting Minutes will be eyed later in the day.
- Federal Reserve (Fed) Board of Governors member Stephen Miran expressed his belief on Tuesday that inflation itself is simply a cause of "population increases". Monetary policy needs to ease to get ahead of the shift down in the neutral rate, Miran added.
- Minneapolis Fed President Neel Kashkari struck a more reserved tone than some of his Fed counterparts on Tuesday, cautioning that it's still too soon to be able to tell if tariff-led inflation will be "sticky" or not. However, Kashkari noted that he's particularly bullish on the labor market and is expecting a return to form for American job creation, which has sputtered recently.
- Kansas City Fed President Jeffrey Schmid delivered hawkish remarks on Monday, saying that the Fed must maintain its inflation credibility and stressed that inflation is too high. Schmid added that monetary policy is appropriately calibrated.
- The CME FedWatch Tool suggests that markets are now pricing in nearly a 95% chance of a Fed rate cut in October and an 83% possibility of another reduction in December.
- United States (US) Senators failed to pass spending proposals to reopen the federal government for a fourth time, extending the ongoing shutdown into a new week. The closure has suspended key federal programs and delayed major economic reports, including September’s jobs data, which was originally due on Friday.
- The US ADP Employment Change report, released on Wednesday, showed that private sector payrolls declined by 32,000 in September, while annual pay growth was 4.5%. This figure followed the 3,000 decrease (revised from a 54,000 increase) reported in August and came in below the market expectation of 50,000.
- The latest Job Openings showed the labor market is slowing, yet vacancies rose from 7.21 million to 7.23 million in August. Meanwhile, the hiring rate edged down to 3.2%, the lowest level since June 2024, while layoffs remained at a low level.
- University of Melbourne reported on Tuesday that Australia’s Westpac Consumer Confidence declined 3.5% month-over-month (MoM) to 92.1 in October, a sharper decline than the previous 3.1% fall, marking the fastest drop since April. ANZ Job Advertisements slipped 3.3% MoM in September, a much steeper drop than the previous decline of 0.3%.
- TD-MI Inflation Gauge showed a 0.4% increase month-over-month in September, rebounding from a 0.3% fall in the prior month. Meanwhile, the annual inflation gauge rose 3%, following a 2.8% increase in the previous period.
Australian Dollar tests lower ascending channel boundary near 0.6550
The AUD/USD pair is trading around 0.6570 on Wednesday. Technical analysis on the daily timeframe suggests that the pair is remaining within the ascending channel, indicating a persistent bullish bias. Additionally, the 14-day Relative Strength Index (RSI) is positioned above the 50 level, strengthening the bullish bias.
On the upside, the AUD/USD pair may rebound toward the nine-day Exponential Moving Average (EMA) at 0.6589. A break above this level would improve the short-term price momentum and support the pair to explore the region around the 12-month high of 0.6707, recorded on September 17.
The immediate support lies at the ascending channel’s lower boundary around 0.6560. A break below the channel would likely cause the emergence of a bearish bias and prompt the AUD/USD pair to navigate the area around the four-month low of 0.6414, recorded on August 21.
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 US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.32% | 0.29% | 0.41% | 0.13% | 0.32% | 0.99% | 0.28% | |
| EUR | -0.32% | -0.02% | 0.11% | -0.17% | -0.02% | 0.72% | -0.04% | |
| GBP | -0.29% | 0.02% | 0.16% | -0.12% | 0.06% | 0.76% | 0.00% | |
| JPY | -0.41% | -0.11% | -0.16% | -0.32% | -0.10% | 0.52% | -0.18% | |
| CAD | -0.13% | 0.17% | 0.12% | 0.32% | 0.18% | 0.86% | 0.13% | |
| AUD | -0.32% | 0.02% | -0.06% | 0.10% | -0.18% | 0.68% | -0.01% | |
| NZD | -0.99% | -0.72% | -0.76% | -0.52% | -0.86% | -0.68% | -0.72% | |
| CHF | -0.28% | 0.04% | -0.01% | 0.18% | -0.13% | 0.01% | 0.72% |
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.
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