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The Australian Dollar (AUD) is retracing its recent losses ahead of the release of the Reserve Bank of Australia’s (RBA) Meeting Minutes on Tuesday. The RBA is considering the possibility of introducing a central bank digital currency (CBDC) in order to save costs. Investors are also anticipating another rate hike by the US Federal Reserve following positive US economic data. The AUD is trading higher against the US Dollar on Monday, breaking its three-day losing streak. The RBA’s Meeting Minutes and employment data later in the week will be closely watched. The introduction of a CBDC could bring significant cost savings to Australia’s financial markets.
Chinese inflation decreasing in September could put pressure on the AUD. Despite a recent government stimulus plan aimed at achieving 5% growth, ongoing economic challenges persist. The US Dollar (USD) has gained momentum after robust US data, including higher than expected inflation and lower than anticipated initial jobless claims. However, the preliminary US Michigan Consumer Sentiment Index for October showed a decline. Investors are pricing in the possibility of another Fed rate hike. The recovery in US Treasury yields is also supporting the USD. Geopolitical tension between Israel and Palestine is leading to a safe-haven flow into the USD.
Market movers include the AUD attempting to retrace its three-day losing streak and the possibility of the RBA introducing a CBDC. Australian Consumer Inflation Expectations for October have increased, raising the likelihood of an interest rate hike by the RBA. Chinese Consumer Price Index for September fell short of expectations, which could prompt the RBA to implement an interest rate hike. Discussions between US and Israeli officials about a visit by US President Joe Biden to Israel could impact the market. US economic data, including the Consumer Price Index and initial jobless claims, surpassed expectations. The US Retail Sales figure is expected to rise. The RBA’s Meeting Minutes and employment data are upcoming.
Technical analysis shows the AUD consolidating above the psychological support level at 0.6300. A key resistance level is observed at 0.6400. The daily chart for AUD/USD displays the percentage change of the AUD against major currencies for the day. The AUD is strongest against the USD.
The Employment Change released by the Australian Bureau of Statistics is a measure of the change in the number of employed people in Australia. A rise in this indicator has positive implications for consumer spending and economic growth. The next release is scheduled for October 19, 2023.
