The Australian Dollar has seen a decline during the early trading hours in Asia on Tuesday. This drop follows a surge in demand for the US Dollar and the renewed concerns triggered by trade tensions under the potential return of Donald Trump to the presidency. Current projections, however, point to a tightening monetary policy from the Reserve Bank of Australia (RBA), which may mitigate further losses for the AUD.
As the Australian Dollar falls to approximately 0.6470, it is primarily affected by the strengthening of the US Dollar, reaching its highest point in three days. The potential for a global trade war, particularly given the tariffs that may be reinstated under Trump, adds to the selling pressure on the Aussie. Nevertheless, hawkish sentiments from new RBA leadership suggest that immediate interest rate cuts are unlikely due to persistently high core inflation, potentially bolstering demand for the currency.
On the economic front, Australia’s retail sales demonstrated positive momentum by increasing 0.6% month-over-month in October, significantly higher than the 0.1% rise observed in September and surpassing expectations for a 0.3% growth. Investors are also anticipating the release of the US Job Openings and Labor Turnover Survey (JOLTs) data for October, alongside comments from key Federal Reserve officials that could impact market sentiment.
In the US, manufacturing activity has shown signs of improvement, with the ISM Manufacturing PMI rising to 48.4 in November, up from 46.5 the previous month, and surpassing market expectations. This data may influence the Fed’s future monetary policy decisions, as Fed officials indicate that a cautious approach to rate cuts might be warranted given the current balance of inflation and employment risks.
Technical analysis reveals that the AUD/USD pair remains in a downtrend, with the price below the key 100-day Exponential Moving Average. Traders are monitoring the lower support at 0.6434; if breached, it could signal further declines towards 0.6330 and possibly 0.6285. Conversely, if the pair can hold above the resistance level at 0.6530, it may reach up to 0.6626 and beyond, should bullish trends persist.
