- Australian Dollar holds ground after the release of domestic Trade Balance data on Thursday.
- Australia’s Trade Surplus narrowed to 1,825M in August, well below expectations of 6,500M and down from 7,310M prior.
- The US Dollar struggles after the federal government shut down on Wednesday.
The Australian Dollar (AUD) maintains its position against the US Dollar (USD) on Thursday, following the release of Trade Balance data. Additionally, the AUD/USD pair moves little as traders adopt caution after the United States (US) government shutdown.
Australian Bureau of Statistics reported on Thursday that Australia’s Trade Surplus narrowed to 1,825 million month-over-month (MoM) in August, against 6,500 million expected and 7,310 million in the previous reading. Meanwhile, Exports fell by 7.8% MoM in August from 3.3% seen a month earlier as Gold exports declined after a run of strong months. Imports rose by 3.2% MoM in August, compared to a decline of 1.3% seen in July.
The Reserve Bank of Australia (RBA) published its semi-annual Financial Stability Review (FSR) on Thursday, warning about risks from elevated asset prices and stress in sovereign debt markets. It noted that highly leveraged trades and the expansion of the non-bank sector are increasing market vulnerabilities. The RBA also warned that weakness in China’s property sector is weighing on banks and is likely to persist.
The RBA decided earlier this week to keep its Official Cash Rate (OCR) unchanged at 3.6% after concluding the September monetary policy meeting. RBA Governor Michele Bullock said at a post-meeting press conference that components of the monthly CPI are a little higher than expected, and inflation is not running away.
Australian Dollar holds ground as US Dollar remains subdued after government shutdown
- The US Dollar Index (DXY), which measures the value of the US Dollar against six major currencies, is subdued for the fifth consecutive session and trading around 97.70 at the time of writing.
- The US federal government shut down on Wednesday after Congress failed to reach a funding deal, resulting in a deadlock. The September US Nonfarm Payrolls (NFP) report will not be released on Friday, as the Labor Department has paused virtually all activity.
- 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.
- The CME FedWatch Tool suggests that markets are now pricing in nearly a 97% chance of a Fed rate cut in October and a 76% possibility of another reduction in December.
- Bloomberg reported on Wednesday that China’s state-run iron ore buyer, China Mineral Resources Group (CMRG), directed steelmakers to stop new purchases from Australian mining giant BHP. The news came as China entered its October 1–8 holiday period. However, the Australian Financial Review cited a Chinese commodity pricing firm, Mysteel, which disputed the report, saying it had “verified through relevant channels and confirmed that this rumour is not true.”
- China’s NBS Manufacturing PMI improved to 49.8 in September, following August’s 49.4. The reading came in above the market consensus of 49.6 in the reported month. The NBS Non-Manufacturing PMI inched lower to 50.0 in September, from August’s 50.3 figure and missed the expectations of 50.3.
- The White House announced that Australian Prime Minister Anthony Albanese and US President Donald Trump will hold their first in-person meeting in Washington, D.C. on October 20 to discuss the Aukus nuclear submarine pact.
- Australia’s AiG Industry Index rose 7.6 points to -13.2 in September, showing slight improvement but remaining in contraction. The S&P Global Manufacturing Purchasing Managers’ Index (PMI) fell to 51.4 in September from 53.0 in August, indicating that the sector continued to expand but at a slower pace.
Australian Dollar remains above 0.6600, nine-day EMA support
The AUD/USD pair is trading around 0.6620 on Thursday. Technical analysis on the daily chart shows that the pair remains within the ascending channel, indicating a prevailing 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, followed by the upper boundary of the ascending channel around 0.6760.
The initial support appears at the nine-day Exponential Moving Average (EMA) of 0.6598, followed by the 50-day EMA at 0.6558 and the ascending channel’s lower boundary around 0.6540. Further declines below the channel would cause the emergence of the bearish bias and prompt the AUD/USD pair to navigate the region around the fourth-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 strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.04% | -0.00% | 0.06% | 0.07% | -0.06% | -0.31% | -0.06% | |
| EUR | 0.04% | 0.03% | 0.09% | 0.10% | -0.03% | -0.15% | -0.04% | |
| GBP | 0.00% | -0.03% | 0.08% | 0.04% | -0.02% | -0.17% | -0.04% | |
| JPY | -0.06% | -0.09% | -0.08% | 0.00% | -0.13% | -0.48% | -0.09% | |
| CAD | -0.07% | -0.10% | -0.04% | -0.00% | -0.13% | -0.22% | -0.12% | |
| AUD | 0.06% | 0.03% | 0.02% | 0.13% | 0.13% | -0.20% | -0.00% | |
| NZD | 0.31% | 0.15% | 0.17% | 0.48% | 0.22% | 0.20% | 0.29% | |
| CHF | 0.06% | 0.04% | 0.04% | 0.09% | 0.12% | 0.00% | -0.29% |
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).
RBA FAQs
The Reserve Bank of Australia (RBA) sets interest rates and manages monetary policy for Australia. Decisions are made by a board of governors at 11 meetings a year and ad hoc emergency meetings as required. The RBA’s primary mandate is to maintain price stability, which means an inflation rate of 2-3%, but also “..to contribute to the stability of the currency, full employment, and the economic prosperity and welfare of the Australian people.” Its main tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will strengthen the Australian Dollar (AUD) and vice versa. Other RBA tools include quantitative easing and tightening.
While inflation had always traditionally been thought of as a negative factor for currencies since it lowers the value of money in general, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Moderately higher inflation now tends to lead central banks to put up their interest rates, which in turn has the effect of attracting more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in the case of Australia is the Aussie Dollar.
Macroeconomic data gauges the health of an economy and can have an impact on the value of its currency. Investors prefer to invest their capital in economies that are safe and growing rather than precarious and shrinking. Greater capital inflows increase the aggregate demand and value of the domestic currency. Classic indicators, such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can influence AUD. A strong economy may encourage the Reserve Bank of Australia to put up interest rates, also supporting AUD.
Quantitative Easing (QE) is a tool used in extreme situations when lowering interest rates is not enough to restore the flow of credit in the economy. QE is the process by which the Reserve Bank of Australia (RBA) prints Australian Dollars (AUD) for the purpose of buying assets – usually government or corporate bonds – from financial institutions, thereby providing them with much-needed liquidity. QE usually results in a weaker AUD.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the Reserve Bank of Australia (RBA) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the RBA stops buying more assets, and stops reinvesting the principal maturing on the bonds it already holds. It would be positive (or bullish) for the Australian Dollar.
Source: Australian Dollar steadies as US Dollar holds ground amid market caution
