The Australian Dollar (AUD) has been facing downward pressure recently, especially after the release of weak economic data. The AUD/USD pair is currently near three-month lows, with the recent decline largely attributed to key economic indicators from Australia. Despite this, the AUD has not been significantly affected by mixed economic data from China, one of Australia’s major trading partners.
In China, Retail Sales rose by 4.8% year-over-year in October, exceeding expectations and the previous month’s figure. Meanwhile, Industrial Production grew by 5.3% YoY, slightly below forecasts but higher than the previous period. Despite these positive figures from China, the Australian Dollar has struggled to gain traction in the markets.
The Reserve Bank of Australia (RBA) Governor Michele Bullock issued less dovish remarks on Thursday, stating that current interest rates will remain unchanged until the bank gains confidence in the inflation outlook. This could potentially limit the decline of the Aussie Dollar in the near future. Additionally, Federal Reserve Chair Jerome Powell noted that the US economy has been performing well, providing flexibility for the Fed to gradually lower interest rates.
On the US front, the US Dollar remains steady near its fresh 2024 highs, with the US Dollar Index (DXY) hovering around 107.06. Market attention is now focused on US October Retail Sales data and comments from Federal Reserve officials. Despite signs of slowing in “Trump trades,” the US Dollar continues to show strength as the Fed considers further interest rate adjustments.
In terms of technical analysis, the AUD/USD pair is trading near 0.6460, with short-term downward pressure indicated on the daily chart. The Relative Strength Index (RSI) is approaching oversold levels, suggesting a possible upward correction in the near future. Key support levels for the pair are around 0.6400, with resistance at 0.6500 and potential further upside towards the nine-day and 14-day Exponential Moving Averages.
Overall, the Australian Dollar is facing challenges in the current market environment, with a mix of economic data influencing its performance against the US Dollar. Despite the downward pressure, less dovish comments from the RBA Governor and positive US economic indicators could potentially provide some support for the AUD in the near term. Investors will continue to monitor key economic data releases and central bank statements for further insights into the direction of the Australian Dollar.
