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The Australian Dollar (AUD) continues to exhibit a persistent decline in its value. That Despite the Reserve Bank of Australia’s (RBA) decision to implement a 25 basis point interest rate hike on Tuesday, The AUD/USD currency pair has also incurred losses. That primarily due to the robust performance of US Treasury yields. Which has contributed to the resurgent strength of the US Dollar (USD) following a recent two-month low
The RBA has embarked on a policy tightening trajectory on The Australian Dollar by elevating the Official Cash Rate (OCR) from 4.10% to 4.35%. This decision comes after the central bank maintained a steady benchmark interest rate over four consecutive meetings. The RBA’s choice to initiate this adjustment can be attributed to the recent Consumer Price Index (CPI) data. Which revealed a third-quarter increase surpassing market consensus. Additionally, Australia’s seasonally adjusted Retail Sales (MoM) for September exceeded initial expectations.
Source: FX Street
The Australian Dollar Near Key Level : RBA Policy, Chinese Trade, and USD Rebound
In the same plot of The Australian Dollar Near Key Level, Investors are poised to meticulously scrutinize the unwavering commitment of RBA Governor Michele Bullock to the recently adopted hawkish stance. Which signaling potential forthcoming interest rate adjustments. Additionally, noteworthy Australian financial institutions, such as ANZ, CBA, Westpac, and NAB, have recalibrated their forecasts in response to the resurgence of inflationary pressures and the hawkish declarations articulated by RBA policymakers.
China’s Trade Balance data for October has unveiled a contraction in the surplus balance. Contrasting with market expectations of an improvement. Particularly noteworthy is the year-on-year (YoY) Exports data, which exhibited a more pronounced decline. Surpassing projected reductions and eclipsing previous declines. In a more similar phase of The Australian Dollar
In amore oposite situation of the The Australian Dollar, The US Dollar Index (DXY) has rebounded from its seven-week nadir, chiefly propelled by the revival in US Treasury yields. The 10-year US Treasury yield has rebounded from its six-week low registered the preceding Friday. Furthermore, in a recent interview with the Wall Street Journal on Monday, Minneapolis Federal Reserve Bank President Neel Kashkari articulated a circumspect approach to monetary policy.
President Kashkari espouses an approach characterized by a proclivity for prudence, reflecting a preference for a stance of monetary restraint rather than the risk of adopting inadequate measures to align inflation with the central bank’s 2% target.
The Australian Dollar Near Key Level :Key Developments in RBA Policy
The Reserve Bank of Australia (RBA) has initiated a renewed phase of policy tightening. Manifesting in the elevation of the Official Cash Rate (OCR) of The Australian Dollar from 4.10% to 4.35%. This adjustment follows an uninterrupted sequence of four consecutive meetings during which the benchmark interest rate remained unaltered.
In the realm of economic indicators, Australia’s TD Securities Inflation, measured on a year-on-year (YoY) basis. Exhibited a reduction to 5.1% in September, marking a decrease from the preceding rate of 5.7%.
During the third quarter, Australia’s Retail Sales presented an amelioration. Registering a positive growth of 0.2%, thereby reversing the previous reading of -0.6%.
Conversely, the Australian Trade Balance (Month-on-Month) witnessed a reduction to 6,786M in September, falling short of the anticipated figure of 9,400M and marking a decline from the preceding 10,161M.
Over the course of the twelve months leading up to September 2023, Australia’s monthly Consumer Price Index (CPI) reflected an increment of 5.6%. However, the quarterly inflation rate receded to 5.4% year-on-year in the third quarter (Q3).
Turning our focus to international trade, China’s Trade Balance data for October revealed a contraction in the surplus balance, amounting to $56.53B. This outcome deviated from market expectations, which anticipated an improvement to $81.95B, as compared to the preceding reading of $77.71B. Notably, Exports (YoY) experienced a more pronounced decline of 6.4%, surpassing the anticipated 3.1% decrease.
Also Read: AUD/USD Currency pair Trends and Economic Indicators
US Economic Data: NFP Figures, Earnings, PMI, and Unemployment Claims
On the US front, the Bureau of Labor Statistics recently released the Non-Farm Payrolls (NFP) data for October, disclosing a figure of 150K. This outcome fell short of the projected 180K and marked a substantial reduction from the 297K recorded in September.
Furthermore, US Average Hourly Earnings (Month-on-Month) registered a decline, amounting to 0.2%, deviating from the anticipated 0.3%. On a year-over-year basis, it reached 4.1%, exceeding the 4.0% expectations.
In addition, the US ISM Services Purchasing Managers’ Index (PMI) exhibited a decline from the previous reading of 53.6 to 51.8. Moreover, the US Department of Labor reported an increase in initial claims for unemployment benefits for the week concluding on October 27, with figures rising from 212,000 to 217,000.
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Disclaimer:
Please note that this article serves solely for informational purposes. As such, it is not financial advice. We strongly advise readers to conduct thorough research and consult with financial professionals before making any investment decisions.
