Australian Dollar remains weaker following China’s CPI
- Australian Dollar weakens as China’s December CPI rose 0.8% YoY, below the 0.9% forecast.
- Australia’s mixed November inflation keeps RBA policy uncertain, with attention shifting to the quarterly CPI later this month.
- The US Dollar strengthens on weekly labor data as traders remain cautious ahead of the US NFP report.
The Australian Dollar (AUD) declines against the US Dollar (USD) on Friday, remaining subdued for the third successive session. The AUD/USD pair remains subdued following the release of key economic data from China, a key trading partner of Australia.
China’s Consumer Price Index (CPI) rose 0.8% year-over-year (YoY) in December, up from 0.7% in November but below the 0.9% forecast. On a monthly basis, CPI increased 0.2%, reversing November’s -0.1% reading. Meanwhile, China’s Producer Price Index (PPI) fell 1.9% YoY in December, improving from a 2.2% decline previously and slightly beating expectations of a -2.0% print.
The Australian Bureau of Statistics (ABS) reported on Thursday that Australia’s Trade Surplus narrowed to 2,936M MoM in November, versus 4,353M (revised from 4,385M) in the previous reading. Exports fell by 2.9% MoM in November from a rise of 2.8% (revised from 3.4%) seen a month earlier. Meanwhile, Imports grew by 0.2% MoM in November, compared to a rise of 2.4% (revised from 2.0%) seen in October.
Australia’s mixed November Consumer Price Index (CPI) left the Reserve Bank of Australia’s (RBA) policy outlook uncertain. Focus now shifts to the quarterly CPI report due later this month for clearer guidance on the RBA’s next policy move. However, RBA Deputy Governor Andrew Hauser said on Thursday that the November inflation data was largely as expected. Hauser added that interest rate cuts are unlikely anytime soon.
US Dollar gains amid solid labor market data
- The US Dollar Index (DXY), which measures the value of the US Dollar against six major currencies, is gaining ground and trading around 98.90 at the time of writing. The Greenback strengthens following the release of US weekly labor market data.
- Traders remain cautious ahead of the US Nonfarm Payrolls (NFP) report, which is expected to offer further insight into labor market conditions and the Federal Reserve’s (Fed) policy outlook. December NFP is forecast to show job gains of 60,000, down from 64,000 in November.
- The US Department of Labor (DOL) reported on Thursday that Initial Jobless Claims rose modestly to 208,000 in the week ended January 3, slightly below market expectations of 210,000 but above the previous week’s revised 200,000. Continuing jobless claims increased to 1.914 million from 1.858 million, indicating a gradual rise in the number of people remaining on unemployment benefits.
- The Institute for Supply Management (ISM) reported on Wednesday that the US Services PMI rose to 54.4 in December from 52.6 in November. This figure came in stronger than the expectations of 52.3.
- The US Automatic Data Processing (ADP) Employment Change showed an increase of 41,000 jobs in December, following a revised decline of 29,000 in November. The figure came in slightly below market expectations of 47,000.
- JOLTS Job Openings came in at 7.146 million in November. This reading followed the 7.449 million openings recorded in October (revised from 7.67 million) and came in below the market expectations of 7.6 million.
- According to the CME Group's FedWatch tool, Fed funds futures continue to price in about an 86.2% probability that the US central bank will keep rates unchanged at its January 27–28 meeting.
- The Australian Bureau of Statistics (ABS) reported on Wednesday that Australia’s Consumer Price Index rose 3.4% year-over-year (YoY) in November, easing from 3.8% in October. The reading missed market expectations of 3.7% but remained above the RBA’s 2–3% target. It marked the lowest inflation since August, with housing costs increasing at the slowest pace in three months.
- Australia’s CPI was unchanged at 0% month-on-month (MoM) in November, matching October’s reading. Meanwhile, the RBA’s Trimmed Mean CPI rose 0.3% MoM and 3.2% YoY. Separately, seasonally adjusted Building Permits surged 15.2% MoM to a near four-year high of 18,406 units in November 2025, rebounding from a downwardly revised 6.1% fall previously. Annual approvals jumped 20.2%, reversing a revised 1.1% decline in October.
- The Australian Financial Review (AFR) suggested that the RBA may not be done tightening this cycle. The poll indicates that inflation is expected to remain stubbornly elevated over the coming year, fueling expectations of at least two additional rate hikes.
Australian Dollar tests lower channel boundary after breaking below 0.6700
AUD/USD is trading around 0.6690 on Friday. Technical analysis of the daily chart indicates that the pair is testing the lower boundary of the ascending channel pattern, suggesting a potential for a weakening of a bullish bias. The 14-day Relative Strength Index (RSI) at 56.8 stays above the midline but has eased from recent peaks, indicating slower bullish impetus.
The immediate resistance lies at the nine-day Exponential Moving Average (EMA) of 0.6700. A break above the short-term average would reinforce the bullish momentum, and the AUD/USD pair may rebound toward the target 0.6766, the highest level since October 2024, followed by the upper boundary of the ascending channel near 0.6850.
On the downside, the break below the lower ascending channel boundary would lead the AUD/USD pair to test the 50-day EMA at 0.6628. Further losses would open the downside toward 0.6414, the lowest since June 2025.
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 | 0.04% | 0.09% | 0.17% | 0.10% | 0.04% | 0.13% | 0.06% | |
| EUR | -0.04% | 0.04% | 0.13% | 0.05% | 0.00% | 0.10% | 0.02% | |
| GBP | -0.09% | -0.04% | 0.08% | 0.01% | -0.04% | 0.05% | -0.03% | |
| JPY | -0.17% | -0.13% | -0.08% | -0.07% | -0.13% | -0.05% | -0.12% | |
| CAD | -0.10% | -0.05% | -0.01% | 0.07% | -0.06% | 0.03% | -0.04% | |
| AUD | -0.04% | -0.00% | 0.04% | 0.13% | 0.06% | 0.09% | 0.01% | |
| NZD | -0.13% | -0.10% | -0.05% | 0.05% | -0.03% | -0.09% | -0.08% | |
| CHF | -0.06% | -0.02% | 0.03% | 0.12% | 0.04% | -0.01% | 0.08% |
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.
(The technical analysis of this story was written with the help of an AI tool)
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