The Australian Dollar (AUD) saw a rise against the US Dollar (USD) following the release of the Purchasing Managers Index (PMI) data for October. With the AUD/USD pair gaining momentum due to a slight weakening of the USD, as well as a dip in US Treasury yields, the AUD continued its upward trajectory. The 2-year and 10-year yields on US Treasury bonds are at 4.07% and 4.23% respectively at the time of reporting. Additionally, the AUD is expected to receive further support from the hawkish sentiment surrounding the Reserve Bank of Australia (RBA), fueled by positive employment data.
The US Dollar faced downward pressure following the release of the Federal Reserve’s (Fed) Beige Book, which indicated that economic activity was unchanged in most Districts. This contrasted with August’s report, where some Districts reported growth. Market analysts are closely monitoring the potential impact on the USD after the release of the Beige Book, as it could influence the Fed’s future rate decisions.
In addition to the PMI release, the Federal Reserve Bank of San Francisco President Mary Daly mentioned in a social media post that the economy is in a more stable position, with inflation decreasing significantly and the labor market showing signs of improvement. This commentary could impact the USD’s performance, especially as traders interpret the Fed’s stance on monetary policy in light of the changing economic conditions.
The People’s Bank of China (PBoC) recently reduced the 1-year Loan Prime Rate (LPR) in a move that aligns with expectations and could stimulate domestic economic activity in China. This may increase demand for Australian exports, further supporting the AUD’s trajectory against major currencies. Additionally, National Australia Bank revised its projection for the RBA, forecasting a rate cut in February 2025 instead of May, with gradual decreases expected until early 2026.
Technical analysis of the AUD/USD pair suggests a short-term bearish outlook as the pair remains below the nine-day Exponential Moving Average (EMA) and the 14-day Relative Strength Index (RSI) is below 50. Key support levels to watch include the two-month low of 0.6614, while resistance levels are anticipated at the nine-day EMA at 0.6680. Traders are closely monitoring these levels to gauge potential price movements in the near term.
Overall, the Australian Dollar’s performance is influenced by a combination of domestic economic indicators such as the PMI data, global market sentiment, and central bank policies. As investors navigate uncertainty in the markets, the AUD’s movement against major currencies remains a key focus, with implications for trade and investment opportunities. Traders will continue to monitor upcoming releases and events that could impact the AUD’s performance in the coming weeks.
