The Australian Dollar gains ground after China’s interest rate decision, while facing pressure from the recovery in the Greenback. The People’s Bank of China (PBoC) kept its loan prime rate (LPR) consistent at 3.45% as expected, causing the AUD/USD pair to face a challenge. However, the US Dollar plunged despite upbeat US housing data released on Friday.
Australia’s central bank is anticipated to hike rates again in the first half of 2024. Reserve Bank of Australia (RBA) Assistant Governor Marion Kohler mentioned that inflation is expected to decrease but won’t hit the RBA’s target until the end of 2025. The RBA Meeting Minutes and RBA Governor Bullock’s speech on Tuesday are events that investors are likely watching.
The US reported soft inflation figures and weak economic activity, leading to a decline in the Greenback. The Federal Reserve (Fed) may be concluding its hiking cycle due to signs of inflationary pressures and a cooling labor market, causing the US Dollar Index (DXY) to recover losses on the back of a recovery in US Treasury yields.
Australian Dollar (AUD) trades higher after China’s interest rate decision, while also reporting positive economic data, including an increase in Employment Change, Wage Price Index, and a stable Unemployment Rate. In contrast, the US reported a rise in Continuing Jobless Claims and Initial Jobless Claims, as well as lower than expected Consumer Price Index (CPI) readings.
The Australian Dollar (AUD) is currently trading higher around the 0.6520 level, with potential barriers at the 0.6550 major level. The US Dollar (USD) faced pressure despite the upbeat US housing data released on Friday.
The table shows the percentage change of the Australian Dollar (AUD) against listed major currencies today, with the AUD being the strongest against the US Dollar.
Factors influencing the Australian Dollar (AUD) include the Reserve Bank of Australia’s (RBA) interest rate decisions, the price of its biggest export, Iron Ore, the Chinese economy, inflation in Australia, and market sentiment. The RBA influences the AUD through interest rates and quantitative easing, while the Chinese economy’s health impacts demand for Australia’s exports. The price of Iron Ore and Trade Balance also play a role in influencing the value of the Australian Dollar.
Overall, the Australian Dollar’s value is influenced by a combination of domestic economic factors, global macroeconomic trends, and market sentiment.
