The Australian Dollar (AUD) saw a dip against the US Dollar (USD) despite the hawkish stance of the Reserve Bank of Australia (RBA). The AUD/USD pair experienced some gains as the USD softened slightly due to a modest decline in US Treasury yields. RBA Deputy Governor Andrew Hauser emphasized the strong labor participation rate in Australia and stated that the RBA is not overly fixated on data.
On the other hand, the US Dollar strengthened, with traders closely monitoring the Federal Reserve’s (Fed) interest rate trajectory. There is increasing speculation that the Fed will be less aggressive in lowering rates than previously anticipated. Additionally, rising speculation of former President Donald Trump potentially securing a second term in the upcoming US presidential election in November has bolstered the Greenback.
The CME FedWatch Tool suggests a 97% probability of a 25-basis-point rate cut by the Fed in November, indicating a shift in sentiment towards a less dovish stance. This has contributed to the USD’s appreciation against other major currencies, including the AUD.
The recent release of S&P Global’s preliminary October US Purchasing Managers Index (PMI) readings showed positive momentum across sectors, with the Composite PMI rising to 54.3. In contrast, Australia’s Judo Bank Composite PMI slightly increased to 49.8 in October, signaling a second consecutive month of contraction in private sector output.
Technical analysis of the AUD/USD pair indicates a short-term bearish trend, with the pair trading around 0.6640 on Thursday. The pair remains below the nine-day Exponential Moving Average (EMA), and the 14-day Relative Strength Index (RSI) is below 50, confirming the bearish bias. Support is tested at the two-month low of 0.6614, with the next major support level at 0.6600.
The Australian Dollar’s performance against major currencies today shows it was weakest against the Canadian Dollar. The heat map depicts the percentage changes of major currencies against each other, providing a visual representation of how each currency pair is performing in relation to one another.Overall, the Australian Dollar faces challenges against the US Dollar amid a less-dovish sentiment surrounding the Fed, despite the hawkish outlook of the RBA. Traders are closely monitoring interest rate decisions and the US presidential election outcome, which could impact the AUD’s performance in the coming months.
