The Australian Dollar (AUD) advances against the US Dollar (USD) on Thursday, extending its gains for the second successive session. The AUD/USD pair gains ground following the release of Australia’s Consumer Inflation Expectations for October, which edged up to 4.8% from 4.7% prior. marking the highest reading since June.
The mounting concerns that Australia’s inflation may exceed forecasts in the third quarter support 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.
China’s Commerce Ministry said on Thursday that the country will tighten rules on rare earth exports, taking effect from December 1. Foreign businesses and individuals must obtain a dual-use items export license for rare earth exports.
The AUD/USD pair is trading around 0.6600 on Thursday. 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 explore the region around the 12-month high of 0.6707, recorded on September 17. A break above this level would support the pair to reach the upper boundary of the ascending channel around 0.6800.
The immediate support lies at the nine-day Exponential Moving Average (EMA) of 0.6594, followed by the 50-day EMA of 0.6564 and the ascending channel’s lower boundary around 0.6560. A break below this crucial support zone 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.
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 US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.13% | -0.09% | -0.09% | -0.09% | -0.33% | -0.23% | -0.04% | |
| EUR | 0.13% | 0.05% | 0.05% | 0.01% | -0.06% | -0.08% | -0.04% | |
| GBP | 0.09% | -0.05% | -0.04% | 0.00% | -0.12% | -0.08% | -0.04% | |
| JPY | 0.09% | -0.05% | 0.04% | -0.08% | -0.14% | -0.17% | -0.00% | |
| CAD | 0.09% | -0.01% | 0.00% | 0.08% | -0.15% | -0.12% | -0.07% | |
| AUD | 0.33% | 0.06% | 0.12% | 0.14% | 0.15% | 0.06% | 0.01% | |
| NZD | 0.23% | 0.08% | 0.08% | 0.17% | 0.12% | -0.06% | 0.05% | |
| CHF | 0.04% | 0.04% | 0.04% | 0.00% | 0.07% | -0.01% | -0.05% |
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).
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.
