The Australian Dollar (AUD) showed some strength following the release of China’s trade surplus data on Thursday, but it remains under pressure against the US Dollar (USD) after disappointing Australian trade data. The AUD/USD pair faces downside risks as the USD could continue to appreciate, buoyed by market optimism following former President Donald Trump’s election victory.
China’s trade surplus expanded to $95.27 billion in October, surpassing the expected $75.1 billion and the previous $81.71 billion. Exports grew by 12.7% year-over-year, significantly above the anticipated 5.0% increase, while imports fell by 2.3%, exceeding expectations of a 1.5% decline.
In contrast, Australia’s trade surplus narrowed to $4.61 billion in September, falling short of expectations of $5.3 billion and the prior month’s $5.28 billion. This marked the smallest surplus since March, as exports dropped more sharply than imports.
Market Movers: US Rate Cut Expectations Weigh on AUD
Traders are anticipating a 25 basis point interest rate cut from the US Federal Reserve in its November meeting, with the CME FedWatch Tool pricing in a 98.1% likelihood of the move. Meanwhile, the USD remains supported by hopes that Trump’s economic policies will lead to stronger growth and inflation, which could slow the pace of future rate cuts.
Australia’s trade data showed exports fell by 4.3% in September, a larger decline than the 0.2% drop seen in August. Imports also fell by 3.1% month-over-month in September, further contributing to the bearish sentiment around the AUD.
Domestically, the Reserve Bank of Australia (RBA) held the Official Cash Rate steady at 4.35% during its latest meeting, continuing its hawkish stance due to ongoing inflation risks and a strong labor market. The country’s economic indicators showed mixed results: Australia’s Judo Bank Services PMI rose to 51.0 in October from 50.6, while the TD-MI Inflation Gauge climbed by 0.3% month-over-month, signaling persistent inflationary pressures.
Technical Outlook: AUD/USD Remains Bearish Below Key Resistance Levels
From a technical standpoint, the AUD/USD pair is trading around 0.6570, still positioned below the nine- and 14-day Exponential Moving Averages (EMAs), indicating bearish momentum. The 14-day Relative Strength Index (RSI) remains below 50, reinforcing the negative outlook.
Immediate support for the AUD/USD pair is near the three-month low at 0.6512, followed by the psychological support level at 0.6500. On the upside, resistance is seen at the nine-day EMA of 0.6594, with further resistance at the 14-day EMA at 0.6612. A breakout above these levels could signal a shift toward a more bullish trend, potentially targeting the 0.6700 psychological level.
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