Politics
Australian dollar comes and goes, China's Xi Jinping to meet US leaders
- The Australian dollar returns to the positive zone against a backdrop of a lukewarm US dollar.
- Australian stock market sees gains; support the Australian dollar.
- A Bloomberg survey of economists finds that the consensus expects the PBoC to implement two additional RRR cuts in 2024.
- The greenback is struggling on expectations that the Fed will begin a rate reduction cycle starting in June.
The Australian dollar (AUD) is moving higher on Tuesday. However, the decline in the United States Dollar (USD) helped support the AUD/USD pair during the early Asian hours. The AUD faced slight downward pressure after the release of Australian Westpac consumer confidence data, which fell 1.8% to 84.4 in March 2024 from 86.0 in February, s moving away from 20-month highs.
The Australian stock market found support from expectations of a rate cut, driven by a decline in Australian consumer confidence, contributing to the strength of the Australian dollar. Despite slight weakness on Wall Street overnight, the ASX 200 index extended its winning streak. Investors should closely monitor the release of Australia's monthly Consumer Price Index (CPI) data on Wednesday.
The US Dollar Index (DXY) saw a second straight day of losses, largely attributed to falling US Treasury yields. Market sentiment is leaning toward expectations that the Federal Reserve (Fed) will begin an easing cycle, with speculation pointing to a potential start in June.
Daily Digest Market Trends: Australian Dollar Gains Ground on Stronger ASX 200
- The Australian Government has committed to supporting an inflation-aligned minimum wage increase this year, recognizing the ongoing challenges faced by low-income families amid rising costs of living.
- According to a Bloomberg survey of economists, the consensus expects the People's Bank of China (PBoC) to implement two more reductions in the reserve requirement ratio (RRR) in 2024, representing a total reduction of 50 basis points.
- Chinese President Xi Jinping is scheduled to meet with U.S. business leaders in Beijing on Wednesday, following his November dinner with U.S. investors in San Francisco. The meeting was initiated by Evan Greenberg, the CEO of the American insurer Chubb. Participants include Stephen Orlins, chairman of the National Committee on US-China Relations, and Craig Allen, chairman of the US-China Business Council.
- Atlanta Fed President Raphael Bostic expressed his expectation of just one rate cut this year, warning that a premature rate cut could lead to greater disruption.
- The president of the Chicago Fed, Austan Goolsbee, aligns with the majority of the board of directors and anticipates three reductions. However, Goolsbee cited the need for additional evidence of decreasing inflation before making rate cuts.
- The change in U.S. new home sales fell 0.3% month-over-month, compared to a previous increase of 1.7%.
- U.S. new home sales (MoM) came in at 0.662 million, lower than the 0.680 million expected in February and the previous 0.664 million.
- The S&P Global Services PMI posted a slight decline in March, from 52.3 to 51.7. The expected reading was 52.0. The manufacturing PMI index reached 52.5 against 51.7 and 52.2 previously expected. The composite PMI showed a slight decline to 52.2 from 52.5 previously.
- Initial jobless claims for the week ending March 15 stood at 210,000, below the expected 215,000 and the previous 212,000.
Technical analysis: Australian dollar returns to major level of 0.6550
The Australian dollar was trading near 0.6550 on Tuesday. If it rises above this level, it could encounter immediate resistance around the major barrier of 0.6550, in conjunction with the nine-day exponential moving average (EMA) at 0.6554. A successful breakout above this level could push the AUD/USD pair to test the 38.2% Fibonacci retracement level at 0.6565. On the downside, if the price pulls back, an important support level will be at the psychological mark of 0.6500, followed by the March low at 0.6477.
AUD/USD: daily chart
Australian dollar price today
The table below shows the percentage change of the Australian Dollar (AUD) against the major currencies listed today. The Australian dollar was the strongest against the Swiss franc.
| USD | EUR | GBP | GUJAT | EUR | JPY | CAD | CHF | |
| USD | -0.12% | -0.13% | -0.06% | -0.12% | -0.04% | -0.25% | 0.05% | |
| EUR | 0.12% | -0.02% | 0.06% | 0.01% | 0.09% | -0.11% | 0.17% | |
| GBP | 0.13% | 0.01% | 0.07% | 0.02% | 0.10% | -0.09% | 0.18% | |
| GUJAT | 0.06% | -0.07% | -0.07% | -0.05% | 0.03% | -0.17% | 0.13% | |
| EUR | 0.10% | -0.02% | -0.03% | 0.04% | 0.07% | -0.15% | 0.14% | |
| JPY | 0.03% | -0.10% | -0.11% | -0.03% | -0.06% | -0.19% | 0.07% | |
| CAD | 0.22% | 0.10% | 0.10% | 0.16% | 0.10% | 0.19% | 0.28% | |
| CHF | -0.04% | -0.17% | -0.18% | -0.11% | -0.16% | -0.08% | -0.28% |
The heat map shows the percentage changes of major currencies against each other. The base currency is selected in the left column, while the quote currency is selected in the top row. For example, if you choose the Euro in the left column and move along the horizontal line to the Japanese Yen, the percentage change shown in the box will represent EUR (base)/JPY (quote).
Australian Dollar FAQs
One of the most important factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). As Australia is a resource-rich country, another key factor is the price of its main export, iron ore. The health of the Chinese economy, its largest trading partner, is a factor, as is Australia's inflation and growth rate. Trade balance. Market sentiment – whether investors are moving into riskier assets (risk) or seeking safe havens (risk aversion) – is also a factor, with risk appetite positive for the AUD.
The Reserve Bank of Australia (RBA) influences the Australian dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The RBA's main objective is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the converse is relatively low interest rates. The RBA may also use quantitative easing and tightening to influence credit conditions, the former being negative for the AUD and the latter positive for the AUD.
China is Australia's largest trading partner, so the health of the Chinese economy has a major influence on the value of the Australian dollar (AUD). When China's economy is doing well, it buys more raw materials, goods and services from Australia, which increases demand for the AUD and drives up its value. The opposite happens when the Chinese economy does not grow as fast as expected. Positive or negative surprises in Chinese growth data therefore often have a direct impact on the Australian dollar and its pairs.
Iron ore is Australia's largest export, worth $118 billion annually according to 2021 data, with China its main destination. The price of iron ore can therefore be a driver of the Australian dollar. Generally, if the price of iron ore rises, so does the AUD, as overall demand for the currency increases. The opposite happens if the price of iron ore falls. Higher iron ore prices also tend to result in a greater likelihood of a positive trade balance for Australia, which is also positive for the AUD.
Another factor that can influence the value of the Australian dollar is the trade balance, which is the difference between what a country earns from its exports and what it pays for its imports. If Australia produces highly sought-after exports, then its currency will gain value solely from the excess demand created by foreign buyers seeking to buy its exports relative to what it spends to buy imports. Therefore, a positive net trade balance strengthens the AUD, with the opposite effect if the trade balance is negative.
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