The Australian Dollar (AUD) Faces Pressure Amidst Global Concerns
On Wednesday, the Australian Dollar (AUD) experienced a decline against the US Dollar (USD) after posting gains exceeding 0.25% in the previous session. The AUD/USD pair remains under pressure, influenced by weakening global equities and growing apprehensions regarding inflated valuations in the artificial intelligence sector. This trend adversely affects sentiment towards riskier currencies, making the AUD particularly vulnerable due to Australia’s significant reliance on commodity exports during times of market uncertainty.
Wage Growth in Australia Remains Steady
Australia’s seasonally adjusted Wage Price Index recorded a quarter-on-quarter growth of 0.8% in Q3, consistent with previous figures and market expectations. Annually, wage growth hit 3.4%, in line with both the prior quarter and analysts’ forecasts, reflecting a stable labor market that may support the AUD in subsequent trading sessions.
Reserve Bank of Australia Indicates Balanced Policy Stance
The Reserve Bank of Australia (RBA) released the Minutes of its November monetary policy meeting, highlighting a balanced approach moving forward. Board members indicated a possibility of maintaining the current cash rate for more extended periods if future economic data exceeds expectations, which may provide underlying support to the AUD in upcoming weeks.
US Dollar Holds Strong Amid Diminishing Fed Rate Cut Speculation
The US Dollar Index (DXY), which gauges the USD against six major currencies, stabilized around 99.60. Strengthened by a decrease in potential Federal Reserve rate cuts, market sentiment shifted as the CME FedWatch Tool reveals only a 49% probability of a 25 basis point cut at the Fed’s December meeting—down from 67% a week earlier. Fed Vice Chair Philip Jefferson emphasized the importance of proceeding cautiously regarding any rate adjustments in the current economic climate.
Labor Market Data Show Mixed Signals
Recent data from the US Department of Labor indicated 232,000 initial jobless claims for the week ending October 18, with continuing claims slightly rising to 1.957 million. Additionally, Automatic Data Processing (ADP) reports revealed a decline of 2,500 jobs per week on average in the four weeks ending November 1, suggesting a cooling labor market that could influence Fed policy. Concerns about persistent inflation and wavering consumer confidence further complicate the economic outlook.
AUD/USD Trading Below Key Levels
As of Wednesday, the AUD/USD pair is trading near 0.6490, indicating consolidation within a rectangular range in daily chart analysis. Currently, the pair remains below the nine-day Exponential Moving Average (EMA), suggesting an active bearish bias. Support levels could arise at the rectangle’s lower boundary around 0.6470, as well as the five-month low of 0.6414 from August 21.
Future Prospects for AUD
The Australian Dollar faces key psychological resistance at the 0.6500 level, followed by the nine-day EMA at 0.6514. A breakthrough above this confluence resistance could enhance short-term momentum, potentially pushing the AUD/USD towards the upper boundary of the range near 0.6630. Market players will be keenly observing developments from the RBA and global economic indicators in the upcoming trading sessions.
