The Australian Dollar has seen a decline following the release of mixed economic data from Australia and the latest Purchasing Managers Index (PMI) from China. In September, Australian Retail Sales recorded a modest growth of 0.1% month-over-month, falling short of the expected 0.3% and significantly down from the previous month’s increase of 0.7%. In contrast, quarterly Retail Sales saw a rebound of 0.5% in the third quarter, recovering from a prior decline of 0.3%.
Market participants are now closely monitoring upcoming economic indicators from the United States, particularly the Personal Consumption Expenditures (PCE) inflation data and the Nonfarm Payrolls report. Meanwhile, the US Dollar has gained some momentum amid ongoing concerns related to the presidential election. However, it has encountered challenges following the announcement that the US Gross Domestic Product (GDP) increased by 2.8% in the third quarter, which was below both the 3.0% growth seen in the second quarter and market expectations.
The decline in the Australian Dollar was exacerbated by lower-than-anticipated Consumer Price Index (CPI) figures, which were released recently. The CPI rose by just 0.2% quarter-over-quarter in Q3, a sharp decrease from the previous quarter’s 1.0% increase. Additionally, the annual CPI in September increased by 2.1%, below the forecast of 2.3% and lower than August’s figure of 2.7%.
In other economic updates, China’s NBS Non-Manufacturing PMI increased slightly to 50.2 in October, although it was still below expectations. The Manufacturing PMI also edged up, surpassing forecasts slightly. In the United States, the ADP Employment Change report indicated robust job growth, with private sector employment increasing by 233,000 jobs in October.
The Reserve Bank of Australia remains firm on maintaining the current cash rate at 4.35%, indicating that this level is appropriate for steering inflation back within the targeted range while supporting job growth. As a result, a rate cut appears unlikely in the immediate future. Meanwhile, consumer confidence in Australia has dipped, which may contribute to further fluctuations in the currency.
From a technical perspective, the Australian Dollar is trading just above 0.6550, near the upper boundary of a descending channel, signaling a short-term bearish trend. Key levels to watch include support around 0.6510 and resistance near 0.6580, with a potential breakout above this level indicating further upward movement.
