The Australian Dollar continues to decline for the second consecutive session, influenced by weaker-than-anticipated consumer prices in Australia. This trend may prompt the Reserve Bank of Australia (RBA) to adopt a more dovish stance on interest rates, putting downward pressure on the AUD/USD pair.
Australia’s Monthly Consumer Price Index (YoY) for February showed a slight increase of 3.4%, falling slightly short of the expected 3.5% and marking the lowest reading since November 2021. The AUD faced additional downward pressure following the release of the Westpac Consumer Confidence data, which declined by 1.8% in March compared to February’s 86.0, easing from 20-month highs.
Meanwhile, the US Dollar Index (DXY) saw gains for the second consecutive day amid a risk-off sentiment ahead of the upcoming release of US Personal Consumption Expenditures (PCE) data. However, the decline in US Treasury yields suggests expectations of potential rate cuts by the US Federal Reserve (Fed), which could limit the US Dollar’s advances.
In terms of market movements, the Australian Westpac Leading Index for February increased by 0.1%, contrasting with the previous month’s decline of 0.09%. The Australian government has pledged support for a minimum wage increase aligned with inflation to address the challenges faced by low-income families due to rising living costs.
Looking ahead, there is consensus among economists for the People’s Bank of China (PBoC) to implement two additional Reserve Requirement Ratio (RRR) cuts in 2024, totaling a reduction of 50 basis points. Additionally, Chinese President Xi Jinping is scheduled to meet with US business leaders, following up on his November dinner with US investors in San Francisco.
In terms of monetary policy, Atlanta Fed President Raphael Bostic expects only one rate cut this year, warning against premature reductions to avoid further disruption. Conversely, Chicago Fed President Austan Goolsbee anticipates three cuts but stresses the need for more evidence of inflation decrease before proceeding.
In economic data releases, US Durable Goods Orders for February exceeded expectations, increasing by 1.4%, while the Housing Price Index for January decreased by 0.1%.
From a technical standpoint, the Australian Dollar trades near 0.6520, with significant support at the psychological level of 0.6500 and March’s low at 0.6477. Resistance levels are observed around the 23.6% Fibonacci retracement level of 0.6541, along with the major barrier of 0.6550 and the 21-day Exponential Moving Average (EMA) at 0.6553.
AUD/USD: Daily Chart
![](https://editorial.fxstreet.com/miscelaneous/_AUD_USD_2024-03-27_08-00-35-638471034282061244.png)
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 Pound Sterling.
USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
USD | 0.03% | -0.01% | 0.09% | 0.13% | 0.11% | 0.02% | 0.15% | |
EUR | -0.03% | -0.05% | 0.06% | 0.10% | 0.06% | 0.00% | 0.12% | |
GBP | 0.00% | 0.02% | 0.09% | 0.12% | 0.17% | 0.01% | 0.14% | |
CAD | -0.09% | -0.08% | -0.08% | 0.04% | 0.02% | -0.06% | 0.06% | |
AUD | -0.13% | -0.10% | -0.13% | -0.02% | -0.09% | -0.10% | 0.02% | |
JPY | -0.11% | -0.08% | -0.11% | 0.04% | 0.02% | -0.15% | 0.05% | |
NZD | -0.03% | 0.00% | -0.06% | 0.06% | 0.12% | 0.14% | 0.11% | |
CHF | -0.15% | -0.12% | -0.16% | -0.06% | -0.02% | -0.05% | -0.13% |
AUSTRALIAN DOLLAR FAQS
What key factors drive the Australian Dollar?
One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate, and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe havens (risk-off) – is also a factor, with risk-on positive for AUD.
How do the decisions of the Reserve Bank of Australia impact the Australian Dollar?
The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.
How does the health of the Chinese Economy impact the Australian Dollar?
China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods, and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.
How does the price of Iron Ore impact the Australian Dollar?
Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive for the AUD.
How does the Trade Balance impact the Australian Dollar?
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought-after exports, then its currency will gain in value purely from the surplus demand created by foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.