Australian Dollar rises as strong jobs data boost RBA caution | FXStreet
The Australian Dollar (AUD) gains ground against the US Dollar (USD) on Thursday, extending its gains for the second consecutive day. The AUD/USD pair appreciates as the AUD receives support following the release of improved employment data from Australia.
The Australian Bureau of Statistics (ABS) released the Unemployment Rate on Thursday, which declined to 4.3% in October from 4.5% in September, against the market expectations of 4.4%. Meanwhile, the Employment Change arrived at 42.2K in the same month from 12.8K (revised from 14.9K) prior, sharply exceeding the market forecast of 20K.
Australia’s Full-Time Employment rose by 55.3K in October, from a rise of 6.5K in the previous reading (revised from 8.7K). Participation Rate steadies at 67%, while the Part-Time Employment decreased by 13.1K in October, versus an increase of 6.3K prior.
The AUD gained support from cautious sentiment surrounding the Reserve Bank of Australia (RBA) policy outlook. RBA Deputy Governor Andrew Hauser said on Wednesday, “Our best estimate is that monetary policy remains restrictive, though the committee continues to debate this.” Hauser added that if the policy is no longer mildly restrictive, it would have significant implications for future decisions.
US Dollar steadies after ending government shutdown
- The US Dollar Index (DXY), which measures the value of the US Dollar against six major currencies, is holding ground and trading around 99.50 at the time of writing. The Greenback moves little after US President Donald Trump signed the government funding bill on Thursday, marking the official end of the record 43-day government shutdown the United States (US) history.
- The US Dollar also gained support from hawkish Fedspeak, which decreased the odds of a Federal Reserve (Fed) rate cut in December. The CME FedWatch Tool shows markets pricing in nearly a 60% chance of a 25-basis-point Fed rate cut in December, down from 67% a day ago.
- Atlanta Fed President Raphael Bostic addressed economic trends at the Atlanta Economic Club on Wednesday. Bostic cautioned that easing policy too soon could “feed the inflation beast,” while noting that a sharp downturn in the labor market is unlikely in the near term.
- Boston Fed President Susan Collins said that “Elevated inflation warrants still mildly restrictive policy,” adding that she has not seen “an increase in downside employment risks since the Summer.”
- Automatic Data Processing (ADP) released the US Employment Change on Tuesday, showing an average weekly job loss of 11,250 in the four weeks to October 25. Weaker-than-expected private US labor data increased the likelihood of the Federal Reserve (Fed) policy easing.
- Challenger, Gray & Christmas announced that US employers slashed 153,074 jobs in October, up from the 55,597 cuts announced in October 2024.
- China’s Ministry of Commerce said on Monday that it would temporarily lift its ban on approving exports of “dual-use items” related to gallium, germanium, antimony, and super-hard materials to the US. The suspension takes effect from Sunday until November 27, 2026. Any change in the Chinese economy could impact the AUD as China is a major trading partner for Australia.
Australian Dollar eyes rectangle’s upper boundary
The AUD/USD pair is trading around 0.6560 on Thursday. On the daily chart, the pair appears to be consolidating within a rectangular range, reflecting sideways movement. Nonetheless, it remains above the nine-day Exponential Moving Average (EMA), suggesting firm short-term bullish momentum.
The AUD/USD pair could target the rectangle’s upper boundary around 0.6630. A break above the rectangle would cause the emergence of the bullish bias and support the pair to test the 13-month high of 0.6707, recorded on September 17.
On the downside, the immediate support lies at the 50-day EMA of 0.6537, followed by the nine-day EMA at 0.6531. A break below these levels would weaken the medium- and short-term price momentum and prompt the AUD/USD pair to test the lower boundary of the rectangle around 0.6470, followed by the five-month low of 0.6414, which was recorded on August 21.
Australian Dollar Price Today
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.03% | 0.08% | 0.09% | 0.05% | -0.27% | 0.18% | 0.13% | |
| EUR | -0.03% | 0.05% | 0.05% | 0.02% | -0.30% | 0.15% | 0.10% | |
| GBP | -0.08% | -0.05% | 0.02% | -0.03% | -0.35% | 0.10% | 0.05% | |
| JPY | -0.09% | -0.05% | -0.02% | -0.07% | -0.37% | 0.04% | 0.02% | |
| CAD | -0.05% | -0.02% | 0.03% | 0.07% | -0.31% | 0.12% | 0.08% | |
| AUD | 0.27% | 0.30% | 0.35% | 0.37% | 0.31% | 0.45% | 0.41% | |
| NZD | -0.18% | -0.15% | -0.10% | -0.04% | -0.12% | -0.45% | -0.05% | |
| CHF | -0.13% | -0.10% | -0.05% | -0.02% | -0.08% | -0.41% | 0.05% |
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).
RBA FAQs
The Reserve Bank of Australia (RBA) sets interest rates and manages monetary policy for Australia. Decisions are made by a board of governors at 11 meetings a year and ad hoc emergency meetings as required. The RBA’s primary mandate is to maintain price stability, which means an inflation rate of 2-3%, but also “..to contribute to the stability of the currency, full employment, and the economic prosperity and welfare of the Australian people.” Its main tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will strengthen the Australian Dollar (AUD) and vice versa. Other RBA tools include quantitative easing and tightening.
While inflation had always traditionally been thought of as a negative factor for currencies since it lowers the value of money in general, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Moderately higher inflation now tends to lead central banks to put up their interest rates, which in turn has the effect of attracting more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in the case of Australia is the Aussie Dollar.
Macroeconomic data gauges the health of an economy and can have an impact on the value of its currency. Investors prefer to invest their capital in economies that are safe and growing rather than precarious and shrinking. Greater capital inflows increase the aggregate demand and value of the domestic currency. Classic indicators, such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can influence AUD. A strong economy may encourage the Reserve Bank of Australia to put up interest rates, also supporting AUD.
Quantitative Easing (QE) is a tool used in extreme situations when lowering interest rates is not enough to restore the flow of credit in the economy. QE is the process by which the Reserve Bank of Australia (RBA) prints Australian Dollars (AUD) for the purpose of buying assets – usually government or corporate bonds – from financial institutions, thereby providing them with much-needed liquidity. QE usually results in a weaker AUD.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the Reserve Bank of Australia (RBA) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the RBA stops buying more assets, and stops reinvesting the principal maturing on the bonds it already holds. It would be positive (or bullish) for the Australian Dollar.