The Australian Dollar has shown resilience recently, buoyed by the latest data from the Melbourne Institute’s Inflation Gauge, which recorded a month-over-month increase of 0.3% in October, a notable rise from the previous month’s 0.1% growth. This increase sets the stage for the Reserve Bank of Australia’s (RBA) upcoming policy meeting, where it is widely anticipated that they will keep the cash rate unchanged at 4.35%. This firm stance on interest rates is supportive of the Australian Dollar, reinforcing its strength against the US Dollar.
The Inflation Gauge’s October data signals growing inflationary pressures, with an annual rise of 3.0%. As the RBA prepares for its meeting, underlying inflation trends lend credence to a hawkish outlook. In this context, the AUD/USD currency pair could continue to see upward momentum as market participants adjust their strategies in response to macroeconomic indicators.
Meanwhile, the US Dollar has come under pressure due to disappointing employment figures for October, where Nonfarm Payrolls only increased by 12,000, significantly lower than the anticipated 113,000. This dip in employment growth, together with stable unemployment at 4.1%, reinforces cautious sentiment in the market. Additionally, traders are awaiting an anticipated 25 basis point rate cut from the Federal Reserve, as indicated by the futures market.
On a broader scale, Australia’s economic activities are also interlinked with developments in China, which is a critical trading partner. Recent data from China’s manufacturing sector suggests some improvement, potentially impacting Australian exports. As both economies navigate their respective challenges, shifts in data could lead to fluctuations in currency valuations.
Looking ahead, technical levels for the AUD/USD pair indicate that it is currently testing the resistance at 0.6600, with the nine-day Exponential Moving Average acting as a key indicator. If the pair can overcome this threshold, there may be further gains towards 0.6700. However, should it break below 0.6536, it may signal a shift toward the support level of 0.6500.
