Australian Dollar maintains its position above a major level, awaits RBA Bullock’s speech
- Australian Dollar continues to move downward on the firm US Dollar.
- Australia’s chief policymaker Michele Bullock will deliver a speech on Tuesday.
- China’s CPI declined by 0.5% in November on both monthly and yearly basis.
- US NFP rose by 199,000 in November against the previous rise of 150,000.
The Australian Dollar (AUD) extends its losses for the second successive session on Monday. The robust employment figures in the United States (US) bolstered the Greenback on Friday, exerting downward pressure on the AUD/USD pair. Furthermore, worries about deflation in China, coupled with a Consumer Price Index (CPI) and Producer Price Index (PPI) that fell short of expectations, contributed to a selling spree on the Australian Dollar (AUD).
Australia’s chief policymaker Michele Bullock, the Governor of the Reserve Bank of Australia (RBA), is scheduled to deliver a speech on Tuesday. The RBA opted to maintain the cash rate at 4.35% at its December meeting. While the RBA maintains a tightening bias, recent economic indicators suggest a likelihood of no further rate hikes in the near future.
US Bureau of Labor Statistics (BLS) revealed on Friday that November’s US Nonfarm Payrolls (NFP) exceeded market forecasts. Simultaneously, the Unemployment Rate saw a decline during the same period. Consequently, there has been an upward surge in US Treasury yields, supporting the strengthening of the USD.
The stronger employment data have ignited discussions and speculations about the forthcoming path of the US Federal Reserve’s (Fed) monetary policy and the duration for which the central bank intends to uphold rates at restrictive levels. The attention will be on the US Consumer Price Index (CPI) on Tuesday and the Fed Interest Rate Decision on Wednesday.
Daily Digest Market Movers: Australian Dollar moves downward on a negative bias
- Australia’s Trade Balance (MoM) data was released last week and showed a surplus of 7,129M against the expected figures of 7,500M in October.
- China’s Consumer Price Index (CPI) experienced a year-on-year decline of 0.5% in November, compared to a 0.2% decrease in October. On a monthly basis, Chinese inflation fell by 0.5%, surpassing the 0.1% decline observed in October.
- China’s Producer Price Index (PPI) recorded a 3.0% year-on-year drop in November, reflecting a more substantial decline than the 2.6% decrease reported in October.
- US Nonfarm Payrolls for November rose by 199,000 against the previous rise of 150,000 in October and the market expectation of 180,000.
- US Average Hourly Earnings (Year-on-Year) held steady at 4.0%, aligning with market projections for November. Meanwhile, the Unemployment Rate dropped to 3.7% from the previous 3.9%.
- The preliminary Michigan Consumer Sentiment Index for December reached 69.4, a notable increase from the previous reading of 61.3.
Technical Analysis: Australian Dollar looks to reach the major level at 0.6550
The Australian Dollar trades lower around 0.6560 on Monday. The 21-day Exponential Moving Average (EMA) at 0.6553 could act as a key support, which is lined up with the major level at 0.6550. A break below the support region could put weight on the AUD/USD pair to navigate the area around 38.2% Fibonacci retracement at 0.6526 level. On the upside, the psychological level at 0.6600 would likely serve as a potential barrier.
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 US Dollar.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | 0.00% | 0.12% | 0.13% | 0.40% | 0.45% | 0.23% | 0.06% | |
| EUR | -0.01% | 0.11% | 0.12% | 0.38% | 0.44% | 0.21% | 0.04% | |
| GBP | -0.10% | -0.11% | 0.02% | 0.29% | 0.34% | 0.12% | -0.05% | |
| CAD | -0.13% | -0.12% | -0.02% | 0.27% | 0.32% | 0.10% | -0.07% | |
| AUD | -0.41% | -0.38% | -0.27% | -0.27% | 0.05% | -0.17% | -0.34% | |
| JPY | -0.44% | -0.43% | -0.42% | -0.31% | -0.04% | -0.21% | -0.38% | |
| NZD | -0.22% | -0.24% | -0.14% | -0.10% | 0.16% | 0.23% | -0.22% | |
| CHF | -0.06% | -0.04% | 0.06% | 0.07% | 0.34% | 0.39% | 0.17% |
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 Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
Employment FAQs
Labor market conditions are a key element to assess the health of an economy and thus a key driver for currency valuation. High employment, or low unemployment, has positive implications for consumer spending and thus economic growth, boosting the value of the local currency. Moreover, a very tight labor market – a situation in which there is a shortage of workers to fill open positions – can also have implications on inflation levels and thus monetary policy as low labor supply and high demand leads to higher wages.
The pace at which salaries are growing in an economy is key for policymakers. High wage growth means that households have more money to spend, usually leading to price increases in consumer goods. In contrast to more volatile sources of inflation such as energy prices, wage growth is seen as a key component of underlying and persisting inflation as salary increases are unlikely to be undone. Central banks around the world pay close attention to wage growth data when deciding on monetary policy.
The weight that each central bank assigns to labor market conditions depends on its objectives. Some central banks explicitly have mandates related to the labor market beyond controlling inflation levels. The US Federal Reserve (Fed), for example, has the dual mandate of promoting maximum employment and stable prices. Meanwhile, the European Central Bank’s (ECB) sole mandate is to keep inflation under control. Still, and despite whatever mandates they have, labor market conditions are an important factor for policymakers given its significance as a gauge of the health of the economy and their direct relationship to inflation.