The Australian Dollar (AUD) has gained significant ground against the US Dollar (USD) on Friday, driven by a positive risk-on mood in the market. This upward momentum is expected to continue, fueled by the hawkish stance of the Reserve Bank of Australia (RBA) on its policy outlook.
RBA Governor Michele Bullock’s recent comments about the potential for rate hikes to combat inflation have bolstered confidence in the AUD. Additionally, the RBA’s August Meeting Minutes hint at a prolonged period of unchanged cash rates, further supporting the Australian currency.
On the other hand, the US Dollar (USD) has faced pressure from lower Treasury yields, despite mixed data from the S&P Global Purchasing Managers Index (PMI). The US Composite PMI for August, although slightly lower at 54.1, still indicates continued growth in business activity for the 19th consecutive month.
Key Market Updates and Insights
- The CME FedWatch Tool now shows a 73.5% probability of a 25 basis point rate cut by the Fed in September, up from 62.0% previously. The chance of a 50 basis point cut has decreased to 26.5%.
- US Services PMI for August rose to 55.2, defying expectations, while Manufacturing PMI declined to 48.0, signaling a second month of contraction.
- Australia’s Judo Bank Composite PMI increased to 51.4 in August, driven by strong services sector performance.
Technical Analysis and Predictions
The AUD/USD pair is currently trading around 0.6710, with the daily chart showing a breach below the ascending channel. However, the RSI remains above 50, indicating ongoing bullish momentum.
Upside potential for the pair lies at the 0.6740 level, with further targets at 0.6798 and 0.6880. Support levels are seen at the 0.6684 and 0.6575 levels.
Visual Representation of AUD/USD Trends
Australian Dollar Price Today
The Australian Dollar has shown strength against major currencies today, with notable gains against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.13% | -0.10% | -0.47% | -0.13% | -0.18% | 0.18% | -0.47% | 0.13% |
Expert FAQs on the Australian Dollar
Learn more about the factors influencing the Australian Dollar and how they impact its value in the global market.
Why is the level of interest rates set by the RBA crucial for the AUD?
The RBA’s interest rate decisions play a significant role in shaping the value of the Australian Dollar, influencing market sentiment and investor confidence.
How does the Chinese economy affect the value of the Australian Dollar?
Australia’s close economic ties with China make the health of the Chinese economy a key determinant of the AUD’s performance.
What role does Iron Ore play in driving the value of the Australian Dollar?
As Australia’s largest export, Iron Ore prices directly impact the Australian Dollar, reflecting demand for the country’s resources.
How does the Trade Balance impact the value of the Australian Dollar?
Australia’s Trade Balance, the difference between exports and imports, influences the AUD’s value based on demand for its goods and services in international markets.