- The Australian dollar remains solid as PMI points to a mixed economic picture.
- Judo Bank Australian’s manufacturing business improved in November but continued to decline, while its services business fell to negative territory.
- The US dollar index hit its recent yearly high of 107.15 after US jobless claims were released on Thursday.
The Australian dollar (AUD) continues to strengthen against the US dollar (USD) following the release of mixed data for the Judo Bank Purchasing Managers’ Index (PMI) in Australia on Friday. The AUD is also benefiting from the Reserve Bank of Australia’s (RBA) hawkish forecasts for future interest rate decisions.
Judo Bank Australia’s manufacturing PMI rose to 49.4 in November from 47.3 in October, marking the tenth consecutive month of decline, although the decline slowed to the weakest pace in six months. Meanwhile, the services PMI fell to 49.6 from 51.0, signaling the first decline in services activity in ten months.
The US Dollar Index (DXY), which tracks the US dollar against a basket of major currencies, is trading near 107.00, just below a fresh yearly high of 107.15 recorded on Thursday. The US dollar strengthened after the publication of last week’s unemployment numbers.
Futures traders now assign a 57.8% probability to a quarter-point rate cut by the Federal Reserve, down from about 72.2% last week, according to CME FedWatch Tool data.
Daily Digest Market Changes: Australian Dollar gains in value thanks to RBA hawkishness
- Traders are awaiting preliminary data on the S&P Global Purchasing Managers’ Index (PMI) and the final Michigan consumer sentiment report, due on Friday.
- The Judo Bank PMI Composite Output Index fell to 49.4 in November from 50.2 in October, indicating a moderate decline in private sector output for the second time in three months.
- New US unemployment claims fell to 213,000 in the week ending November 15, down from a revised 219,000 (previously 217,000) in the previous week and below the expected 220,000.
- The US dollar gained in value thanks to cautious comments from Federal Reserve (Fed) officials. Additionally, market expectations suggest that the incoming Donald Trump administration will stimulate inflation, thus slowing the trajectory of Fed rate cuts, supporting the dollar.
- A Reuters poll showed that nearly 90% of economists (94 of 106) expect a 25 basis point cut in December, lowering the federal funds rate to 4.25%-4.50%. Economists predict shallower interest rate cuts in 2025 due to the risk of higher inflation as a result of President-elect Trump’s policies. The federal funds rate is projected to be 3.50-3.75% by the end of 2025, 50 basis points higher than last month’s projection.
- Minutes from the Reserve Bank of Australia’s November meeting showed the central bank’s board remains vigilant about the possibility of further inflation, underscoring the importance of maintaining tight monetary policy. While board members saw no “immediate need” to change the interest rate, they left the options open for future adjustments, emphasizing that all options remain under consideration.
- According to Bloomberg, Federal Reserve Bank of Boston President Susan Collins said Wednesday that while further interest rate cuts are necessary, policymakers should tread carefully to avoid moving too quickly or too slowly. Meanwhile, Fed Governor Michelle Bowman emphasized that inflation has remained elevated over the past few months and emphasized the need for the Fed to proceed cautiously with interest rate cuts.
- Australian Treasurer Jim Chalmers said “falling iron ore prices and a weakening labor market are having an impact on government revenues” – following his Wednesday ministerial statement on the economy. Chalmers outlined Australia’s hard fiscal outlook, citing China, a key trading partner, and a slowdown in the labor market as weakening factors.
- Fed Chairman Jerome Powell downplayed the likelihood of imminent interest rate cuts, emphasizing the economy’s resilience, solid labor market and continuing inflationary pressures. Powell noted: “The economy is not sending any signals that we should be in a hurry to lower interest rates.”
Technical Analysis: The Australian Dollar is testing the nine-day EMA above 0.6500
On Friday, AUD/USD is hovering around 0.6510, and technical analysis of the daily chart indicates a bearish outlook. The pair remains in a descending channel and the 14-day relative strength index (RSI) is below 50, reinforcing negative sentiment.
On the other hand, AUD/USD could target the lower boundary of the descending channel at 0.6360 and then the yearly low of 0.6348, which was reached on August 5.
On the other hand, the AUD/USD pair is facing resistance at the nine-day EMA at 0.6518 and the 14-day EMA at 0.6533. A break above these levels could reduce bearishness and pave the way for gains towards the four-week high at 0.6687.
AUD/USD: Daily chart
Australian DOLLAR PRICE today
The table below shows the current percentage change of the Australian Dollar (AUD) against the major listed currencies. The Australian dollar was strongest against the New Zealand dollar.
| USD | EUR | GBP | JPY | BOOR | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.09% | 0.09% | -0.05% | 0.03% | -0.02% | 0.36% | -0.01% | |
| EUR | -0.09% | -0.00% | -0.11% | -0.05% | -0.10% | 0.27% | -0.10% | |
| GBP | -0.09% | 0.00% | -0.10% | -0.05% | -0.10% | 0.25% | -0.10% | |
| JPY | 0.05% | 0.11% | 0.10% | 0.08% | 0.03% | 0.39% | 0.04% | |
| BOOR | -0.03% | 0.05% | 0.05% | -0.08% | -0.06% | 0.32% | -0.05% | |
| AUD | 0.02% | 0.10% | 0.10% | -0.03% | 0.06% | 0.38% | 0.00% | |
| NZD | -0.36% | -0.27% | -0.25% | -0.39% | -0.32% | -0.38% | -0.37% | |
| CHF | 0.00% | 0.10% | 0.10% | -0.04% | 0.05% | -0.00% | 0.37% |
The heat map shows the percentage changes of the major currencies relative to each other. The base currency is selected from the left column and the quote currency from the top row. For example, if you select Australian Dollar from the left column and move along the horizontal line to US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).
Economic indicator
Judo Bank Composite PMI
Composite Purchasing Managers Index (PMI), published monthly by Judo Bank and Global S&Pis a leading indicator assessing the performance of private enterprises in Australia, both in the manufacturing and service sectors. The data comes from surveys of senior management. Each answer is weighted according to the size of the company and its share of total production or services attributable to the subsector to which the company belongs. Survey responses reflect possible changes in the current month compared to the previous month and can predict changing trends in official data series such as gross domestic product (GDP), industrial production, employment and inflation. The index ranges from 0 to 100, and a level of 50.0 means no change compared to the previous month. A reading above 50 indicates that the Australian private economy is growing overall, which is a bullish signal for the Australian dollar (AUD). Meanwhile, a reading below 50 signals that activity is generally sinking, which is seen as bearish for the AUD.
Last release: Thu November 21, 2024 10:00 p.m. (pre-release)
Frequency: Monthly
Actual: 49.4
Agreement: –
Previous: 50.2
Source: Global S&P
