• Australian Dollar holds ground above 0.6350 post rebounding from the 10-month low.
  • Australia’s Retail Sales reported a 0.2% print, lower than the expected 0.3%.
  • US Dollar continues to strengthen on higher US Treasury yields, coupled with upbeat economic data.

The Australian Dollar (AUD) hit a 10-month low on Wednesday. However, the AUD/USD pair holds ground after the release of disappointing Australia’s Retail Sales data.

Australia’s monthly Consumer Price Index (CPI) has rebounded from July’s reading, which could be attributed to the increasing energy prices. This expected increase in inflation has raised anticipations of another interest rate hike by the Reserve Bank of Australia (RBA). However, the AUD failed to gain traction despite positive Consumer Price Index (CPI) figures.

The Aussie Dollar is under downward pressure due to increased risk aversion sentiment in the market. The drop in commodity prices is also acting as a limiting factor on the upside potential of the AUD/USD pair.

The US Dollar Index (DXY) continues to strengthen, propelled by robust macroeconomic data from the United States (US), trading at its highest levels since December. This surge in the US Dollar (USD) is attributed to the positive performance of US Treasury yields over an impending US government shutdown. The yield on the 10-year US Treasury note has reached record highs.

The bullish momentum in the USD is further reinforced by the hawkish remarks made by Federal Reserve (Fed) board members. Neel Kashkari, the President of the Minneapolis Federal Reserve, recently made comments that suggest the potential for additional rate hikes in the future.

Kashkari also left open the possibility of interest rates remaining at their current levels if rate cuts are delayed even further.

Daily Digest Market Movers: Australian Dollar falls on market caution, higher US Treasury yields, hot macros

  • AUD/USD attempts to rebound after hitting a 10-month low at 0.6331 on Wednesday, trading around 0.6360 at the time of writing during early Asian trading hours on Thursday.
  • Australian Retail Sales for August, decreased to a 0.2% growth rate from the previous rate of 0.5%. The index was expected to grow at a 0.3% rate.
  • Australia’s Monthly Consumer Price Index (CPI) year-over-year for August rose 5.2% as expected, up from the previous rate of 4.9%.
  • There is a growing expectation for rate increases in the subsequent November and December meetings by the RBA.
  • US Dollar’s (USD) strength is attributed to the positive performance of US Treasury yields over an impending US government shutdown. The yield on the 10-year US Treasury note has reached record highs.
  • US Durable Goods Orders rose 0.2%, swinging from the previous decline of 5.6% and market expectation of a 0.5% decline in August.
  • EIA Crude Oil Stocks Change data, on the week ending September 22, decreased to a reading of -2.17M from -2.135M prior. The report was expected to release a -0.32M figures.
  • The situation in China regarding Evergrande continues to worsen, with increasing turmoil, intrigue, and uncertainty. Bloomberg reported on Wednesday that the chairman of the company had been placed under police surveillance.
  • Evergrande, the world’s most indebted developer with over $300 billion in total liabilities, is at the heart of an unprecedented liquidity crisis in China’s property sector.
  • The hawkish remarks from Neel Kashkari, the President of the Minneapolis Federal Reserve have led to a broad-based strengthening of the US Dollar (USD) and have acted as a headwind for the AUD/USD pair. Kashkari emphasized the potential for additional rate hikes in the future.
  • Traders await the US data such as the Core Personal Consumption Expenditure (PCE) Price Index, the Fed’s preferred measure of consumer inflation, which is due on Friday. The annual rate is expected to reduce from 4.2% to 3.9%.

Technical Analysis: Australian Dollar hovers around 0.6350, barrier at 0.6400 psychological level

Australian Dollar trades higher around 0.6360 level during the Asian session on Thursday. AUD/USD pair could find a barrier around 0.6400 psychological level, followed by the 21-day Exponential Moving Average (EMA) at 0.6422. A firm break above the latter could support the Aussie Dollar (AUD) to explore the region around 23.6% Fibonacci retracement at 0.6464. On the downside, the monthly low at 0.6357 aligned with the 0.6350 psychological level could be the key support, following the 0.6300 psychological level.

AUD/USD: Daily Chart

Australian Dollar price this week

The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies this week. Australian Dollar was the weakest against the US Dollar.

USD   1.38% 0.88% 0.12% 1.11% 0.66% 0.36% 1.53%
EUR -1.40%   -0.51% -1.26% -0.26% -0.74% -1.04% 0.16%
GBP -0.89% 0.51%   -0.75% 0.25% -0.22% -0.52% 0.67%
CAD -0.14% 1.24% 0.74%   0.99% 0.53% 0.22% 1.39%
AUD -1.12% 0.25% -0.25% -1.00%   -0.47% -0.77% 0.41%
JPY -0.66% 0.74% 0.24% -0.52% 0.47%   -0.27% 0.89%
NZD -0.37% 1.03% 0.52% -0.22% 0.76% 0.30%   1.18%
CHF -1.57% -0.18% -0.68% -1.44% -0.43% -0.90% -1.21%  

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 Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).


Source link