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Australian Dollar gains ground as US Dollar declines amid hawkish RBA Governor Bullock – Crypto News
- Australian Dollar moves upward on a hawkish sentiment from the RBA Governor Michele Bullock.
- Australia’s chief policymaker Bullock indicated the RBA’s focus on supporting a robust labor market in Australia.
- China has lifted restrictions on three meat suppliers from Australia.
- FOMC commences its two-day policy meeting with the expectation of no change in interest rates.
The Australian Dollar (AUD) continues to gain ground following a volatile previous session. The ANZ-Roy Morgan Australian Consumer Confidence weekly survey rose to 80.8 from the previous week’s 76.4, coinciding with the Reserve Bank of Australia (RBA) leaving interest rates unchanged at last week’s final meeting for the year. Additionally, Westpac Consumer Confidence for December showed improvement at 2.7% from the previous decline of 2.6%.
Australia’s chief policymaker, Michele Bullock, the Governor of the RBA, expressed confidence, stating, “Don’t think we are falling behind in the inflation fight.” Bullock emphasized a cautious approach, closely monitoring data, and highlighted the RBA’s commitment to preserving employment gains. The central bank aims to prevent inflation expectations from getting “out of control.”
China has lifted its restrictions on imports of meat from Australia, removing suspensions on three meat suppliers. This positive development has the potential to boost sentiment and serve as a tailwind for the Australian Dollar. However, concerns about deflation in China prompted a selling trend for the AUD.
The US Dollar Index maintains its strength, supported by firmer US Treasury yields. The robust employment figures in the United States (US) boosted the Greenback, exerting downward pressure on the AUD/USD pair. A stronger US Dollar (USD) tends to dampen investor appetites and acts as a headwind for the pair.
The Federal Open Market Committee (FOMC) commences its two-day monetary policy meeting on Tuesday, and the prevailing expectation is that there will be no change in interest rates during this session. Market participants will closely watch the statement for signals about potential rate adjustments next year. Tuesday will also focus on the US Consumer Price Index (CPI) report for November, providing insights into potential monetary policy paths.
Daily Digest Market Movers: Australian Dollar moves upward amid weaker business conditions
- National Australia Bank’s Business Conditions for November, reflecting trading, profitability, and employment conditions in Australia, decreased to 9 from the previous reading of 13.
- National Australia Bank Business Confidence, which surveys the current business conditions in Australia and provides insights into the short-term performance of the overall economy, declined to 9 from the previous decrease of 2.
- China’s Consumer Price Index (CPI) experienced a year-on-year decline of 0.5% in November, compared to a 0.2% decrease in October. Monthly Chinese inflation fell by 0.5%, surpassing the 0.1% decline observed in October.
- China’s Producer Price Index (PPI) recorded a 3.0% year-on-year drop in November, reflecting a more substantial decline than the 2.6% decrease reported in October.
- US Nonfarm Payrolls for November rose by 199,000 against the previous rise of 150,000 in October and the market expectation of 180,000.
- US Average Hourly Earnings (Year-on-Year) held steady at 4.0%, aligning with market projections for November. Meanwhile, the Unemployment Rate dropped to 3.7% from the previous 3.9%.
- The preliminary Michigan Consumer Sentiment Index for December reached 69.4, a notable increase from the previous reading of 61.3.
Technical Analysis: Australian Dollar stays above the major level at 0.6550
The Australian Dollar trades around 0.6580 on Tuesday. The 21-day Exponential Moving Average (EMA) at 0.6555 may serve as a crucial support level, aligning with the significant level at 0.6550. If this support region is breached, it could exert downward pressure on the AUD/USD pair, potentially leading it toward the 38.2% Fibonacci retracement level at 0.6526. On the upside, the psychological level at 0.6600 is likely to act as a potential resistance barrier.
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 US Dollar.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | -0.02% | -0.11% | -0.11% | -0.18% | -0.22% | -0.23% | -0.07% | |
| EUR | 0.02% | -0.08% | -0.07% | -0.16% | -0.22% | -0.21% | -0.05% | |
| GBP | 0.11% | 0.08% | 0.01% | -0.08% | -0.11% | -0.10% | 0.04% | |
| CAD | 0.10% | 0.09% | -0.01% | -0.06% | -0.12% | -0.12% | 0.04% | |
| AUD | 0.18% | 0.16% | 0.07% | 0.09% | -0.06% | -0.05% | 0.10% | |
| JPY | 0.24% | 0.17% | 0.11% | 0.11% | 0.08% | 0.00% | 0.14% | |
| NZD | 0.21% | 0.20% | 0.12% | 0.12% | 0.04% | -0.01% | 0.14% | |
| CHF | 0.06% | 0.05% | -0.03% | -0.02% | -0.10% | -0.16% | -0.15% |
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).
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.
