- Australian Dollar weakened amid uncertainty after Bloomberg reported that China Mineral Resources Group instructed steelmakers to stop purchases from BHP.
- Australia’s AiG Industry Index climbed 7.6 points to -13.2 in September.
- The US Dollar struggles after recent US jobs data increased the odds of further Fed rate cuts.
The Australian Dollar (AUD) depreciates on Wednesday, with the AUD/USD pair trading around 0.6600 during the Asian hours. The AUD struggles after Bloomberg reported that China’s state-run iron ore buyer, China Mineral Resources Group (CMRG), directed steelmakers to stop new purchases from Australian mining giant BHP. The news came as China entered its October 1–8 holiday period.
However, the Australian Financial Review cited a Chinese commodity pricing firm, Mysteel disputed the report, saying it had “verified through relevant channels and confirmed that this rumour is not true.”
Australia’s AiG Industry Index rose 7.6 points to -13.2 in September, showing slight improvement but remaining in contraction. The S&P Global Manufacturing Purchasing Managers’ Index (PMI) fell to 51.4 in September from 53.0 in August, indicating that the sector continued to expand but at a slower pace.
The Reserve Bank of Australia (RBA) decided Tuesday to hold the Official Cash Rate (OCR) steady at 3.6% after concluding the September monetary policy meeting. RBA Governor Michele Bullock said at a post-meeting press conference that components of the monthly CPI little higher than expected, and inflation is not running away. Not giving forward guidance, will have more data in November, Bullock added.
Australian Dollar declines despite a weaker US Dollar on government shutdown
- The US Dollar Index (DXY), which measures the value of the US Dollar USD) against six major currencies, is remaining subdued around 97.80 at the time of writing. Traders are likely to await the release of September’s US ADP Employment Change and ISM Manufacturing PMI data, which could be affected due to the government shutdown.
- The Greenback remains subdued after soft US jobs data increased the odds of Federal Reserve (Fed) rate cuts. The CME FedWatch Tool suggests that markets are now pricing in nearly a 97% chance of a Fed rate cut in October and a 76% possibility of another reduction in December.
- The latest Job Openings showed the labor market is slowing, yet vacancies rose from 7.21 million to 7.23 million in August. Meanwhile, the hiring rate edged down to 3.2%, the lowest level since June 2024, while layoffs remained at a low level.
- The US government has shut down, with around 750,000 federal employees facing furloughs after Congress failed to pass funding bills. The US Labor Department said Monday that its statistics agency would suspend data releases, including Friday’s closely watched monthly jobs report, if a partial shutdown occurs.
- The White House announced that Australian Prime Minister Anthony Albanese and US President Donald Trump will hold their first in-person meeting in Washington, D.C. on October 20 to discuss the Aukus nuclear submarine pact.
- China’s NBS Manufacturing PMI improved to 49.8 in September, following August’s 49.4. The reading came in above the market consensus of 49.6 in the reported month. The NBS Non-Manufacturing PMI inched lower to 50.0 in September, from August’s 50.3 figure and missed the expectations of 50.3.
- Australia’s Building Permits fell 6% month-over-month in August, following July’s 8.2% drop and surpassing the forecast decline of 5.5%.
Australian Dollar moves below 0.6600 to near nine-day EMA support
The AUD/USD pair is trading around 0.6600 on Wednesday. Technical analysis on the daily chart shows that the pair has rebounded to the ascending channel, indicating a bullish bias is active. Additionally, the 14-day Relative Strength Index (RSI) is positioned slightly above the 50 level, strengthening the bullish bias.
On the upside, the AUD/USD pair may explore the region around the 12-month high of 0.6707, recorded on September 17, followed by the upper boundary of the ascending channel around 0.6760.
The immediate support lies at the nine-day Exponential Moving Average (EMA) of 0.6590, followed by the 50-day EMA at 0.6555 and the ascending channel’s lower boundary around 0.6540. A break below the channel would cause the emergence of the bearish bias and prompt the AUD/USD pair to navigate the region around the fourth-month low of 0.6414, recorded on August 21.
AUD/USD: Daily Chart
Australian Dollar Price Today
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the weakest against the Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.12% | -0.06% | -0.09% | 0.01% | 0.25% | -0.04% | -0.14% | |
| EUR | 0.12% | 0.08% | 0.02% | 0.13% | 0.40% | 0.11% | -0.02% | |
| GBP | 0.06% | -0.08% | -0.04% | 0.06% | 0.32% | 0.04% | -0.08% | |
| JPY | 0.09% | -0.02% | 0.04% | 0.12% | 0.32% | 0.28% | 0.04% | |
| CAD | -0.01% | -0.13% | -0.06% | -0.12% | 0.24% | -0.03% | -0.15% | |
| AUD | -0.25% | -0.40% | -0.32% | -0.32% | -0.24% | -0.28% | -0.41% | |
| NZD | 0.04% | -0.11% | -0.04% | -0.28% | 0.03% | 0.28% | -0.12% | |
| CHF | 0.14% | 0.02% | 0.08% | -0.04% | 0.15% | 0.41% | 0.12% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).
RBA FAQs
The Reserve Bank of Australia (RBA) sets interest rates and manages monetary policy for Australia. Decisions are made by a board of governors at 11 meetings a year and ad hoc emergency meetings as required. The RBA’s primary mandate is to maintain price stability, which means an inflation rate of 2-3%, but also “..to contribute to the stability of the currency, full employment, and the economic prosperity and welfare of the Australian people.” Its main tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will strengthen the Australian Dollar (AUD) and vice versa. Other RBA tools include quantitative easing and tightening.
While inflation had always traditionally been thought of as a negative factor for currencies since it lowers the value of money in general, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Moderately higher inflation now tends to lead central banks to put up their interest rates, which in turn has the effect of attracting more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in the case of Australia is the Aussie Dollar.
Macroeconomic data gauges the health of an economy and can have an impact on the value of its currency. Investors prefer to invest their capital in economies that are safe and growing rather than precarious and shrinking. Greater capital inflows increase the aggregate demand and value of the domestic currency. Classic indicators, such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can influence AUD. A strong economy may encourage the Reserve Bank of Australia to put up interest rates, also supporting AUD.
Quantitative Easing (QE) is a tool used in extreme situations when lowering interest rates is not enough to restore the flow of credit in the economy. QE is the process by which the Reserve Bank of Australia (RBA) prints Australian Dollars (AUD) for the purpose of buying assets – usually government or corporate bonds – from financial institutions, thereby providing them with much-needed liquidity. QE usually results in a weaker AUD.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the Reserve Bank of Australia (RBA) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the RBA stops buying more assets, and stops reinvesting the principal maturing on the bonds it already holds. It would be positive (or bullish) for the Australian Dollar.