The Australian Dollar (AUD) continued to strengthen against the US Dollar (USD) for the second consecutive day on Friday. This upside of the AUD/USD pair is largely due to stronger-than-expected domestic employment data released on Thursday, which led traders to scale back expectations of a Reserve Bank of Australia (RBA) interest rate cut this year.
The Australian Dollar may have also gained support from confirmation of rate cuts in China, its largest trading partner. China's Industrial Commercial Bank, Bank of Communications, and China Merchants Bank announced a 25 basis point cut. Lower interest rates are expected to stimulate domestic economic activity, which in turn could boost demand for Australian exports to China.
China’s Gross Domestic Product (GDP) grew at an annual rate of 4.6% in the third quarter of 2024, slightly down from the 4.7% growth recorded in the second quarter but exceeding market expectations of 4.5%. On a quarterly basis, GDP rose by 0.9% in Q3 2024, up from 0.7% in the previous quarter but falling short of the 1.0% forecast. China’s Retail Sales in September increased by 3.2% year-over-year, outperforming both the expected 2.5% growth and the prior figure of 2.1%.
The US Dollar (USD) edges lower as Treasury yields decline. However, the Greenback reached a two-month high of 103.87 on Thursday, supported by a solid US Retail Sales report, which fueled expectations that the Federal Reserve (Fed) may implement nominal rate cuts. According to the CME FedWatch Tool, there is a 90.8% probability of a 25-basis-point rate cut in November and a 74.0% chance of another cut in December.
The AUD/USD pair trades around 0.6710 on Friday. A technical analysis of the daily chart shows that the pair has successfully broken above the descending channel pattern, indicating a potential shift from a bearish to a bullish trend. However, the 14-day Relative Strength Index (RSI) remains below 50, suggesting that bearish sentiment is still prevalent.
On the upside, the AUD/USD pair could test the nine-day Exponential Moving Average (EMA) at 0.6724, followed by a key psychological resistance at 0.6800.
Regarding support, the pair may attempt to re-enter the descending channel. A successful return could reinforce the bearish outlook, with the pair potentially targeting its eight-week low of 0.6622, last seen on September 11, and then the lower boundary of the descending channel around 0.6580.
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 | JPY | CAD | AUD | NZD | CHF | |
---|---|---|---|---|---|---|---|---|
USD | -0.07% | -0.09% | -0.16% | 0.00% | -0.12% | -0.03% | 0.00% | |
EUR | 0.07% | 0.00% | -0.07% | 0.06% | -0.07% | 0.06% | 0.09% | |
GBP | 0.09% | -0.00% | -0.06% | 0.07% | -0.05% | 0.07% | 0.05% | |
JPY | 0.16% | 0.07% | 0.06% | 0.15% | 0.03% | 0.11% | 0.13% | |
CAD | -0.00% | -0.06% | -0.07% | -0.15% | -0.12% | -0.00% | -0.03% | |
AUD | 0.12% | 0.07% | 0.05% | -0.03% | 0.12% | 0.10% | 0.10% | |
NZD | 0.03% | -0.06% | -0.07% | -0.11% | 0.00% | -0.10% | -0.00% | |
CHF | -0.00% | -0.09% | -0.05% | -0.13% | 0.03% | -0.10% | 0.00% |
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 Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).
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