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In spite of adverse economic indicators emanating from Australia on Thursday. The Australian Dollar (AUD) has managed to recover from recent setbacks. The Australian Dollar and USD (The AUD/USD pair) retraced from its nearly four-month high of 0.6676 in the preceding session. With the downward influence attributed to the resurgence of the US Dollar (USD).
During the third quarter, Australia’s Private Capital Expenditure experienced a contraction of 0.6%. Marking a noteworthy departure from the previous expansion of 2.8%. This contraction fell short of the expected uptick of 1.0%. Data released by the Australian Bureau of Statistics underscores a decline in both present and future capital expenditure intentions within the private sector of the country. Consequently, this development holds the potential to alleviate inflationary pressures, thereby diminishing the likelihood of an interest rate hike by the Reserve Bank of Australia (RBA).
China’s November PMI Data and US Economic Updates
In November, China’s NBS Manufacturing Purchasing Managers’ Index (PMI) dipped to 49.4 from its previous reading of 49.5. Contrary to market expectations of a rise to 49.7. Simultaneously, the Non-Manufacturing PMI contracted to 50.02, falling short of the anticipated 51.1 and the previous reading of 50.6. The subdued PMI figures may stimulate discussions about the necessity for additional stimulus, a factor currently favoring the Australian Dollar.
On Wednesday, the US Dollar Index (DXY) successfully interrupted its four-day losing streak. Buoyed by stronger-than-expected US Gross Domestic Product Annualized data released by the US Bureau of Economic Analysis. This data indicated an upswing in the value of final goods and services produced in the United States during the third quarter. However, the DXY encounters challenges in sustaining its position on Thursday.
Later in the North American session, the United States poised to reveal crucial economic data. Particularly noteworthy are the weekly Jobless Claims for the week ending on November 24, with an expected increase to 220K from the previous 209K. Additionally, the Core Personal Consumption Expenditure (PCE) Price Index for October will disclosed. With projections indicating a deceleration in consumer inflation. The anticipated annual rate expected to decrease from 3.7% to 3.5%.
Australian Dollar oscillates: Australia’s Economic Metrics and US Performance: October Insights
In October, Australia’s Monthly Consumer Price Index (CPI) posted a reading of 4.9%, marking a decrease from the previous month’s figure of 5.6% in September and slightly below the anticipated 5.2%.
Australia’s Retail Sales data for October, adjusted for seasonality, showed a monthly decline of 0.2%, contrary to market expectations of a 0.1% increase and the previous reading of 0.9%.
Also read: Australian Retail Sales Faced Strong Contractions
Reserve Bank of Australia (RBA) Governor Michele Bullock emphasized that the existing monetary policy leans towards the restrictive side. The prospect of rate hikes viewed as tempering demand, particularly in the context of persistent services inflation. Governor Bullock underscored the need for caution in deploying high-interest rates to address inflation without inadvertently elevating the unemployment rate.
US Federal Reserve Governor Christopher Waller suggested that if inflation consistently decreases, there is no necessity to maintain elevated interest rates.
In the third quarter, the US Gross Domestic Product Annualized exhibited growth at 5.2%, surpassing the prior reading of 4.9% and exceeding the market consensus of 5.0%.
The US Housing Price Index (MoM) held steady at 0.6% in September, aligning with the expected figure of 0.4%.
In November, the CB Consumer Confidence Index saw an increase, reaching 102.0. This uptick followed a downward revision of October figures, which were adjusted from 102.6 to 99.1.
AUD/USD Analysis: Key Levels and Potential Movements
As of Thursday, the Australian Dollar is trading at heightened levels, hovering around 0.6640. Immediate resistance is observed at the key level of 0.6650, with a notable barrier at the psychological threshold of 0.6700. A successful breakthrough above this point could lend support to the AUD/USD pair, potentially initiating a test of resistance levels reminiscent of the peak in August, positioned at 0.6723. Conversely, pivotal support is anchored around the seven-day Exponential Moving Average (EMA) at 0.6597. A decisive breach beneath the EMA has the potential to guide the pair towards support levels proximate to the 23.6% Fibonacci retracement at 0.6576, followed by the significant level at 0.6550.
