Australian Dollar maintains position following RBA Meeting Minutes release
- The Australian Dollar moves little as the RBA Minutes of its October meeting indicated that policy is still a little restrictive.
- Traders adopt caution as RBA Governor Michele Bullock said that services inflation remains persistent.
- The US Dollar may face challenges amid rising odds of further Fed rate cuts.
The Australian Dollar (AUD) holds ground against the US Dollar (USD) on Tuesday. The AUD/USD pair moves little following the release of the Reserve Bank of Australia’s (RBA) Minutes of its October monetary policy meeting, which showed that board members agreed that policy was still a little restrictive but difficult to determine.
The RBA Meeting Minutes also noted that economic risks persist, with consumption remaining weak amid softer job and wage growth. Monthly CPI data for housing and services indicate that Q3 inflation could come in above forecasts.
Market sentiment remains cautious after RBA Governor Michele Bullock remarked last week that services inflation remains somewhat persistent. She acknowledged that second-quarter inflation was slightly above expectations but continues to move in the right direction.
Australia’s Consumer Inflation Expectations rose to 4.8% in October, up from 4.7% previously, the highest level since June. Growing concerns that inflation may surpass forecasts in Q3 reinforce the cautious outlook surrounding the Reserve Bank of Australia. Traders largely expect the RBA to hold interest rates steady after keeping the Official Cash Rate unchanged at 3.6% in September.
US Dollar steadies ahead of Fed Chair Powell’s speech
- The US Dollar Index (DXY), which measures the value of the US Dollar against six major currencies, is remaining steady and trading around 99.30 at the time of writing. Traders will likely observe the speech from US Federal Reserve (Fed) Chair Jerome Powell later in the day.
- The CME FedWatch Tool suggests that markets are now pricing in nearly a 97% chance of a Fed rate cut in October and a 92% possibility of another reduction in December.
- Philadelphia Fed President Anna Paulson said on Monday that rising risks to the job market argue for more interest rate cuts by the US central bank, as trade tariffs now appear unlikely to push up inflation as much as expected.
- The Federal Open Market Committee (FOMC) Minutes from the September meeting suggested policymakers are leaning toward further rate cuts this year. The majority of policymakers supported the September rate cut and signaled further reduction later this year. However, some members favored a more cautious approach, citing concerns about inflation.
- US President Trump stated on Friday that there was no reason to meet with China’s President Xi Jinping during the upcoming summit in South Korea in two weeks. Trump also announced plans to impose 100% tariffs on Chinese imports. However, Trump shared some conciliatory remarks in his post on Truth Social on Sunday, noting that China’s economy “will be fine” and that the US wants to “help China, not hurt it.”
- China's Commerce Ministry announced on Thursday that the country will tighten rules on rare earth exports, effective December 1. Foreign businesses and individuals must obtain a dual-use items export license for rare earth exports.
- China's Trade Balance arrived at CNY645.47 billion in September, narrowing from the previous figure of CNY732.7 billion. Exports rose 8.4% YoY in September vs. 4.8% in July. The country’s imports advanced 7.5% YoY in the same period vs. 1.7% recorded previously. In US Dollar (USD) terms, China’s Trade Surplus came at $90.45 billion, expanded less than expected $98.96 billion in September, and was down from the previous $102.33.
- Reuters, citing a report from The Age on Sunday, said a leaked brief from Australia’s Prime Minister Anthony Albanese’s department revealed that government officials have begun discussions with miners about contributing to a A$1.2 billion ($776.28 million) “critical minerals strategic reserve.” Australia is considering setting minimum prices for critical minerals and providing funding for new rare earth projects under a proposed resources agreement with the United States.
Australian Dollar holds above 0.6500 to target nine-day EMA barrier
The AUD/USD pair is trading around 0.6510 on Tuesday. Technical analysis on the daily chart suggests a prevailing bearish bias as the pair is moving downwards within a descending channel pattern. Additionally, the 14-day Relative Strength Index (RSI) remains below the 50 level, strengthening a bearish bias.
On the downside, the AUD/USD pair may target the lower boundary of the descending channel around 0.6460. A break below the channel would strengthen the bearish bias and prompt the pair to test the four-month low of 0.6414, recorded on August 21, followed by the five-month low of 0.6372.
The initial barrier lies at the nine-day Exponential Moving Average (EMA) of 0.6546, followed by the 50-day EMA at 0.6556. A break above these levels would improve the short- and medium-term price momentum and lead the AUD/USD pair to test the descending channel’s upper boundary around 0.6600. Further advances above the channel would cause the emergence of the bullish bias and support the pair to explore the region around the 12-month high of 0.6707, recorded on September 17.
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 | 0.00% | -0.03% | 0.14% | 0.00% | 0.04% | 0.04% | 0.03% | |
| EUR | 0.00% | -0.03% | 0.14% | -0.01% | 0.09% | 0.05% | 0.04% | |
| GBP | 0.03% | 0.03% | 0.18% | 0.04% | 0.11% | 0.12% | 0.07% | |
| JPY | -0.14% | -0.14% | -0.18% | -0.13% | -0.12% | -0.13% | -0.15% | |
| CAD | -0.00% | 0.00% | -0.04% | 0.13% | 0.07% | 0.04% | 0.03% | |
| AUD | -0.04% | -0.09% | -0.11% | 0.12% | -0.07% | -0.03% | -0.04% | |
| NZD | -0.04% | -0.05% | -0.12% | 0.13% | -0.04% | 0.03% | -0.01% | |
| CHF | -0.03% | -0.04% | -0.07% | 0.15% | -0.03% | 0.04% | 0.00% |
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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