The Australian Dollar (AUD) declines against the US Dollar (USD) on Wednesday, extending its losses for the fifth consecutive day. However, the downside of the AUD/USD pair could be restrained as the Aussie Dollar could find support as markets grow increasingly wary of a Reserve Bank of Australia (RBA) rate hike as early as February.
Commonwealth Bank of Australia and National Australia Bank now expect the RBA to start tightening sooner than previously projected, pointing to stubborn inflation in a capacity-constrained economy. Their forecasts followed the central bank’s hawkish hold on rates at its final 2025 meeting last week. Swaps price in a 28% chance of a February hike, nearly 41% in March, with August almost fully priced.
The AUD remains under pressure as Australia’s preliminary S&P Global Manufacturing PMI edged up to 52.2 in December from 51.6 previously, according to data released by S&P Global on Tuesday. Meanwhile, the Services PMI slipped to 51.0 from 52.8, and the Composite PMI fell to 51.1 from 52.6.
US Dollar struggles despite diminishing Fed rate cut bets
- The US Dollar Index (DXY), which measures the value of the US Dollar against six major currencies, is holding ground and trading around 98.20 at the time of writing. The USD could find support as mixed labor market data did little to reinforce expectations of additional Federal Reserve rate cuts.
- The US November jobs report showed payroll growth of 64K, slightly above forecasts, but October figures were revised sharply lower, and the unemployment rate rose to 4.6%, the highest since 2021, underscoring a gradually cooling labor market. Retail sales were flat on the month, reinforcing signs that consumer demand is losing momentum.
- Atlanta Fed President Raphael Bostic said in a blog post on Tuesday that the jobs report was a mixed picture and that it did not change the outlook, and that he would prefer to leave rates unchanged at the last Fed meeting. Bostic said that “multiple surveys” are suggesting that there are higher input costs and that firms are determined to preserve their margins by increasing prices. He added that “Price pressures are not just coming from tariffs, the Fed should not be hasty to declare victory,” and that he sees GDP for 2026 at around 2.5%.
- Fed officials are split over whether more easing of monetary policy is needed next year. The median Fed official penciled in just one reduction in 2026, but some policymakers see no further cuts. Meanwhile, traders anticipate two rate cuts next year.
- The CME FedWatch tool suggests that Fed funds futures are pricing an implied 74.4% chance of a hold in rates at the US central bank’s next meeting in January, up from nearly 70% a week ago.
- The National Bureau of Statistics (NBS) showed Monday that China’s Retail Sales rose 1.3% year-over-year (YoY) in November vs. 2.9% expected and 2.9% in October. Chinese Industrial Production increased 4.8% YoY in the same period, compared to the 5.0% forecast and 4.9% seen previously.
- China’s Fixed Asset Investment came in at -2.6% year-to-date (YTD) YoY in November, missing the expected -2.3% figure. The October reading was -1.7%.
- The Australian Bureau of Statistics (ABS) reported last week that the Unemployment Rate steadied at 4.3% in November. The figure came in below the market consensus of 4.4%. Furthermore, the Australian Employment Change arrived at -21.3K in November from 41.1K in October (revised from 42.2K), compared with the consensus forecast of 20K.
Australian Dollar hovers around nine-day EMA near lower ascending channel boundary
The AUD/USD pair is trading around 0.6630 on Wednesday. The technical analysis of the daily chart shows the pair trading within an ascending channel trend, reflecting a bullish bias. However, the pair is hovering around the nine-day Exponential Moving Average (EMA), indicating a neutral short-term price momentum.
The AUD/USD pair could test the lower boundary of the ascending channel around 0.6620. A break below the channel could put downward pressure on the pair to navigate the region around the six-month low of 0.6414, recorded on August 21.
On the upside, the AUD/USD pair may target the three-month high of 0.6685, followed by 0.6707, the highest since October 2024. Further advances would support the pair to test the upper ascending channel boundary around 0.6740.
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 US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.17% | 0.28% | 0.22% | 0.14% | 0.25% | 0.23% | 0.13% | |
| EUR | -0.17% | 0.11% | 0.04% | -0.03% | 0.09% | 0.06% | -0.05% | |
| GBP | -0.28% | -0.11% | -0.06% | -0.14% | -0.03% | -0.04% | -0.16% | |
| JPY | -0.22% | -0.04% | 0.06% | -0.06% | 0.04% | 0.02% | -0.09% | |
| CAD | -0.14% | 0.03% | 0.14% | 0.06% | 0.10% | 0.08% | -0.03% | |
| AUD | -0.25% | -0.09% | 0.03% | -0.04% | -0.10% | -0.01% | -0.12% | |
| NZD | -0.23% | -0.06% | 0.04% | -0.02% | -0.08% | 0.01% | -0.11% | |
| CHF | -0.13% | 0.05% | 0.16% | 0.09% | 0.03% | 0.12% | 0.11% |
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).
Read the full article here