Australian Dollar seems to surpass the psychological level on a subdued US Dollar – Crypto News – Crypto News
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Australian Dollar seems to surpass the psychological level on a subdued US Dollar – Crypto News

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  • Australian Dollar retraces its losses on risk-on sentiment.
  • Australian job advertisements improved by 0.1% in December from the 4.6% prior.
  • PBoC former director Sheng Songchen stated that China’s property downturn might persist for another two years.
  • US Dollar remains steady despite downbeat US bond yields.

The Australian Dollar (AUD) attempts to recover its losses on Monday after a decline in the previous two sessions. The Australian Dollar gains ground on a softer US Dollar (USD) amid subdued US Treasury yields. The market is anticipated to be relatively quiet regarding US economic data due to the observance of Martin Luther King Jr. Day on Monday.

Australia’s currency experienced upward support due to heightened market speculation about potential rate cuts by the US Federal Reserve (Fed) in March. This speculation gained momentum, especially after Barclays revised its forecast on Friday for the first Federal Reserve (Fed) rate cut, moving it up to March from June. In a note released on Friday, Barclays analysts expressed their expectation for the Federal Open Market Committee (FOMC) to reduce the Fed Funds rate by 25 basis points at the March meeting.

Australia’s job advertisements released by the Australia and New Zealand Banking Group Limited (ANZ) showed an improvement of 0.1% in December, swinging from the previous decline of 4.6%. Market participants are expected to closely observe the Westpac Consumer Confidence for January and the TD Securities Inflation for December, both scheduled for release on Tuesday. The focus will be shifted toward Consumer Inflation Expectations and labor market data on Thursday.

The People’s Bank of China’s (PBoC) former director Sheng Songchen stated at a forum in Shanghai on Saturday that the property downturn in China might persist for an additional two years before stabilizing, according to Bloomberg. He anticipates that new-home sales nationwide will likely decrease by another 50 million square meters in 2024 and 2025. The annual total for 2025 is expected to plateau around 850 million square meters.

The US Dollar Index (DXY) continues to gain ground for the third successive session. However, the softer Producer Price Index (PPI) data from the United States (US) on Friday might have contributed downward for the US Dollar. US Retail Sales data will be eyed on Wednesday.

Daily Digest Market Movers: Australian Dollar experiences gains on a risk-on mood

  • Australia’s trade surplus increased to 11,437M MoM in December, surpassing the market expectation of 7,500M and exceeding the previous reading of 7,129M.
  • Australian Monthly Consumer Price Index (YoY) for November showed a slight reduction to 4.3%, falling slightly short of the market expectation of 4.4% from the previous figure of 4.9%.
  • Chinese Consumer Price Index (YoY) decreased by 0.3% in December, against the expected 0.4% decline. The monthly Consumer Price Index eased at 0.1%, compared to the market expectation of 0.2%. The yearly Producer Price Index fell by 2.7%, slightly exceeding the expected decline of 2.6%.
  • Chinese Trade Balance in USD increased to $75.34B from the previous $68.39B, surpassing the expected $74.75B. The Exports (YoY) figure grew by 2.3%, exceeding the market consensus of 1.7%. The yearly Imports in CNY increased by 1.6%, compared to the previous 0.6%.
  • US Bureau of Labor Statistics reported that the December Producer Price Index (PPI) figure was 1.0% year-on-year, compared to the previous reading of 0.8%. The Core PPI YoY arrived at 1.8%, down from 2.0% in November. Monthly, the headline and Core PPI indices remained flat at -0.1% and 0.0%, respectively.
  • US Bureau of Labor Statistics reported that the Consumer Price Index (CPI) surged to 3.4% YoY in December, exceeding both November’s 3.1% and the anticipated market figure of 3.2%. The monthly CPI growth for December showed a 0.3% increase, surpassing the market analysts’ estimated projection of 0.2%. The annual Core CPI stood at 3.9%, a slight decrease from November’s 4.0%, while the monthly figure remained steady at 0.3%, in line with expectations.

Technical Analysis: Australian Dollar consolidates near 0.6700 psychological level

The Australian Dollar trades near 0.6690 on Monday, positioned below the psychological barrier at 0.6700 followed by the 14-day Exponential Moving Average (EMA) at 0.6721. A potential breakthrough above the EMA might propel the AUD/USD pair toward the key resistance at 0.6750. On the downside, crucial support lies at 0.6650, in conjunction with the 38.2% Fibonacci retracement level, situated at 0.6637.

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 New Zealand Dollar.

  USD EUR GBP CAD AUD JPY NZD CHF
USD   -0.04% 0.00% -0.03% 0.03% -0.03% 0.06% 0.01%
EUR 0.06%   0.03% -0.01% 0.06% 0.01% 0.10% 0.05%
GBP -0.01% -0.03%   -0.04% 0.02% -0.02% 0.07% 0.02%
CAD 0.05% 0.00% 0.05%   0.06% 0.00% 0.10% 0.06%
AUD -0.03% -0.06% 0.00% -0.05%   -0.03% 0.05% 0.01%
JPY 0.04% -0.04% -0.11% -0.01% 0.06%   0.09% 0.04%
NZD -0.06% -0.13% -0.07% -0.11% -0.05% -0.09%   -0.05%
CHF 0.00% -0.06% -0.02% -0.06% 0.01% -0.05% 0.04%  

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.

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