Australian Dollar Faces Pressure Amidst Rising US Dollar and Treasury Yields
- The Australian Dollar (AUD) retraces recent gains due to US Dollar (USD) strength and higher Treasury yields.
- Hawkish sentiment around the Reserve Bank of Australia (RBA) may limit the downside for the Aussie Dollar.
- US Dollar receives support from reduced rate cut expectations by the Federal Reserve in November.
On Wednesday, the AUD/USD pair experiences downward pressure as the USD strengthens alongside rising Treasury yields. Market risk aversion has escalated due to the increasing likelihood of Donald Trump winning the presidency, leading to selling pressure on US Treasury bonds.
Despite these challenges, the AUD’s decline could be tempered by the hawkish stance of the RBA, supported by positive employment data. Additionally, recent rate cuts by China have provided further support to the Aussie Dollar, as China remains a crucial trading partner for Australia.
The USD gains strength as economic resilience and reduced concerns about inflation resurgence diminish the prospects of a significant rate cut by the Federal Reserve in November.
With a 91% probability of a 25-basis-point rate cut according to the CME FedWatch Tool, a larger 50-basis-point cut is not anticipated.
Daily Digest Market Movers: Australian Dollar Faces Risk Aversion
- 2-year and 10-year yields on US Treasury bonds currently stand at 4.04% and 4.21%, respectively.
- Fed officials like Neel Kashkari, Mary Daly, and Jeffrey Schmid provide varying perspectives on the pace of rate cuts and labor market stability.
- RBA Deputy Governor Andrew Hauser highlights strong employment growth and the RBA’s data-dependent approach.
- People’s Bank of China cuts Loan Prime Rates to stimulate domestic economic activity and boost demand for Australian exports.
- National Australia Bank revises rate cut projections, expecting gradual decreases in interest rates by early 2026.
Technical Analysis: AUD/USD Pair Indicates Bearish Trend
Trading around 0.6670, the AUD/USD pair shows a bearish outlook on the daily chart with a position below the nine-day Exponential Moving Average (EMA) and the 14-day Relative Strength Index (RSI) below 50.
Key support levels include the six-week low of 0.6622 and the psychological barrier at 0.6600. Resistance is anticipated at 0.6698 and 0.6733, with a potential rise towards 0.6800 upon breaking these levels.
AUD/USD: Daily Chart
Australian Dollar PRICE Today
The table below illustrates the percentage change of the Australian Dollar (AUD) against major currencies today, with the AUD being weakest against the USD.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.26% | -0.23% | -0.18% | 0.13% | -0.18% | -0.10% | ||
| EUR | -0.26% | 0.04% | 0.33% | 0.04% | 0.23% | 0.17% | 0.07% | |
| GBP | 0.23% | -0.04% | 0.30% | -0.02% | 0.18% | 0.14% | 0.08% | |
| JPY | 0.18% | -0.33% | -0.30% | -0.31% | -0.13% | -0.16% | -0.22% | |
| CAD | -0.13% | -0.17% | -0.14% | 0.16% | 0.01% | -0.08% | 0.09% | |
| AUD | 0.18% | -0.23% | -0.18% | 0.13% | -0.18% | -0.01% | -0.10% | |
| NZD | 0.14% | -0.17% | -0.14% | 0.16% | -0.17% | 0.01% | -0.08% | |
| CHF | -0.10% | -0.07% | -0.08% | -0.22% | 0.09% | -0.10% | -0.08% |
The heat map displays percentage changes of major currencies against each other, showing the AUD as weakest against the USD.
Australian Dollar FAQs
One of the most significant factors affecting the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Other key drivers include commodity prices, particularly Iron Ore, the health of the Chinese economy, inflation, growth rate, and Trade Balance in Australia, as well as market sentiment.
The RBA influences the AUD by adjusting interest rates to maintain stable inflation rates. Higher interest rates compared to other central banks support the AUD, while quantitative easing and tightening have varying effects on the currency.
The health of the Chinese economy significantly impacts the AUD due to China being Australia’s largest trading partner. Positive or negative news regarding Chinese growth directly affects the Australian Dollar.
The price of Iron Ore, Australia’s top export, plays a crucial role in influencing the AUD. Higher Iron Ore prices typically result in a stronger AUD due to increased demand for the currency.
The Trade Balance, reflecting the difference between exports and imports, also affects the AUD. A positive Trade Balance strengthens the AUD, while a negative one weakens it.