The Australian dollar traded in a narrow range on Friday as traders approached recent data releases with caution. The currency remains under pressure, trading near 0.6470 against the US dollar, amid ongoing uncertainties surrounding China’s economic outlook and global trade developments.
Investors are awaiting China’s trade balance data, expected later in the day, which could influence the AUD due to China’s significant role as Australia’s primary trading partner. China’s trade figures have shown some signs of stabilization, with the country’s PMI for manufacturing and services remaining above contraction levels, although recent declines in manufacturing PMI point to a cautious outlook for the near-term. The ongoing trade negotiations, including potential tariff suspensions between China and the US, may provide some support to global economic confidence. The US government’s prolonged shutdown and indications from Federal Reserve officials that another interest rate cut in December is far from guaranteed have also kept market sentiment subdued.
On the monetary policy front, the Reserve Bank of Australia maintained its official cash rate at 3.6%, with policymakers emphasizing a cautious stance amid persistent inflationary pressures. The latest economic data from Australia showed a robust trade surplus of nearly 3.94 billion Australian dollars in September, driven by a 7.9% rise in exports. However, the central bank continues to prioritize inflation control, addressing concerns that previous rate cuts have yet to fully pass through the economy.
Technical analysis suggests the AUD/USD remains within a consolidation pattern, with current levels testing support around 0.6460. A break below this level could lead to further declines toward five-month lows at 0.6414, while resistance on the upside is capped around 0.6508. Any upward momentum beyond this resistance could open the door to retesting recent highs near 0.6707. Overall, traders appear to favor caution ahead of upcoming data releases and geopolitical developments, underscoring the current period of subdued market activity.
