The Australian Dollar (AUD) remained stable on Thursday following the release of mixed economic data from Australia and China’s NBS Purchasing Managers Index (PMI). Ongoing hawkish expectations regarding the Reserve Bank of Australia‘s (RBA) policy have supported the Aussie and limited the downside of the AUD/USD pair.
In September, Australian Retail Sales rose by 0.1% month-over-month, falling short of the anticipated 0.3% and significantly lower than the 0.7% growth recorded in the previous month. However, on a quarterly basis, Retail Sales increased by 0.5% in the third quarter, bouncing back from a 0.3% decline in the previous quarter.
The US Dollar (USD) gained some traction amid market caution related to the upcoming US presidential election. Nonetheless, the Greenback faced challenges as the US Gross Domestic Product (GDP) annualized growth rate was 2.8% in the third quarter, below both the 3.0% growth in the second quarter and market forecasts.
Market participants are now focusing on key upcoming US data releases, including PCE inflation data on Thursday and Nonfarm Payrolls (NFP) on Friday.
The Australian Dollar initially faced downward pressure following the release of Australia’s lower-than-expected third-quarter Consumer Price Index (CPI) data. However, mixed economic reports from the US helped to balance this effect. China’s NBS Non-Manufacturing PMI rose to 50.2 in October, up from 50.0 in the previous month, though slightly below expectations of 50.4. Meanwhile, the NBS Manufacturing PMI edged up to 50.1 from 49.8, modestly exceeding forecasts.
The ADP Employment Change report revealed that private sector employers in the US added 233,000 jobs in October, the largest increase since July 2023, following an upward revision of September’s figures to 159,000, significantly surpassing forecasts of 115,000.
The Australian Bureau of Statistics reported a 0.2% quarter-over-quarter rise in the CPI for the third quarter, down from 1.0% previously and below the expected 0.3%. Year-over-year, the CPI rose by 2.1% in September, undercutting market expectations of 2.3% and down from August’s 2.7% reading.
On Tuesday, the US Bureau of Labor Statistics reported that job openings (JOLTS) fell to 7.443 million in September, down from 7.861 million in August and below the market expectation of 7.99 million.
The RBA indicated that the current cash rate of 4.35% is adequately restrictive to guide inflation back to its target range of 2%-3%, suggesting that a rate cut in November is unlikely. Meanwhile, ANZ-Roy Morgan’s Australia Consumer Confidence index dropped to 86.4 this week, down from 87.5 the previous week.
From a technical perspective, the AUD/USD pair hovers near 0.6570, within a descending channel, with a short-term bearish trend evident on the daily chart. The 14-day Relative Strength Index (RSI) is trending lower, just above the 30 level, reinforcing bearish sentiment.
On the support side, the AUD/USD may test the lower boundary of the descending channel around 0.6510, with the psychological level of 0.6500 also in play. Resistance levels to watch include the upper boundary of the descending channel near 0.6580 and the key psychological barrier at 0.6600. A breakout above these levels could pave the way toward the nine-day Exponential Moving Average (EMA) at 0.6608.
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