Australian dollar fell as traders remained cautious due to concerns about Trump’s tariffs on Chinese products.
On Friday, the Australian dollar (AUD) edged lower versus the US dollar (USD). The AUDUSD pair continues to face downside risks due to concerns over Donald Trump’s proposals to boost taxes on Chinese imports, considering that Australia is one of China’s top exporters.
However, the Australian Dollar pair appreciated by more than 1% as the US Dollar (USD) encountered difficulties following the Federal Reserve’s interest rate decision in the previous session. Furthermore, the Australian Dollar benefited from China’s trade balance, which was stronger than predicted and revealed on Thursday.
Fed Chair Jerome Powell highlighted that the central bank will continue to analyze economic data before deciding on future interest rate policy.
The Federal Open Market Committee (FOMC) cut its benchmark overnight borrowing rate by 25 basis points (bps) to a target range of 4.50%-4.75% during its November meeting on Thursday. Investors are now looking forward to the release of preliminary US Michigan Consumer Sentiment data, which is anticipated later on Friday.
Given the persistent tightness of monetary policy, Federal Reserve Chair Jerome Powell signaled that the central bank will continue to decrease interest rates. Powell highlighted that the Fed will continue to evaluate economic data to determine the “pace and destination” of future rate changes. noting that inflation has gradually slowed to the Fed’s 2% objective.
Daily Market Movers: Australian Dollar falls on Trump’s tariff threats.
The US Dollar Index (DXY), which measures the value of the US Dollar against the other six main currencies, has improved to about 104.50, with 2-year and 10-year rates on US Treasury bonds at 4.20% and 4.33%, respectively, at the time of publication.
The US Department of Labor (DoL) reported on Thursday that initial jobless claims increased to 221,000 for the week ending November 1. This amount was consistent with earlier expectations and increased from the previous week’s corrected total of 218,000 (which was previously published as 216,000).
China’s trade surplus increased in October, reaching $95.27 billion year on year, exceeding the projected $75.1 billion, compared to $81.71 billion previously. Exports increased by 12.7% YoY, much exceeding the expected 5.0% increase and the prior 2.4% gain. Meanwhile, annual imports declined by 2.3%, exceeding the predicted 1.5% decrease and deviating from the prior 0.3% growth.
The Australian Bureau of Statistics said Thursday that Australia’s trade surplus decreased to 4,609 million in September, down from an estimated 5,300 million and 5,284 million in August. Exports declined by 4.3% in September, compared to a 0.2% decline the previous month. Meanwhile, imports declined 3.1% month on month in September, compared to a 0.2% decrease in August.
US ISM Services Purchasing Managers’ Index rose to 56.0 in October, up from 54.9 in September.
The US ISM Services Purchasing Managers’ Index rose to 56.0 in October, up from 54.9 in September, and exceeded the prediction of 53.8 . In contrast, the S&P Global Services PMI reported at 55.0 in October, slightly lower than the previous figure and the projected 55.3.
The Reserve Bank of Australia (RBA) opted to keep the Official Cash Rate (OCR) unchanged at 4.35% on Tuesday, marking the eighth consecutive pause. RBA Governor Michele Bullock restated her hawkish approach, highlighting the importance of tight monetary policy in the face of continuing inflation threats and a healthy labor market.
Australia’s Judo Bank Services PMI rose to 51.0 in October from 50.6 the previous month, exceeding the market consensus of 50.6. The Composite PMI rose to 50.2 in October, up from 49.8 the previous month. Caixin China Services PMI improved to 52.0 in October from 50.3 in September.
The TD-MI Inflation Gauge increased by 0.3% month on month in October, up from a 0.1% gain the previous month, marking the highest figure since July and coming ahead of the RBA’s November policy meeting. Annually, the gauge increased by 3.0%, up from the prior figure of 2.6%.
Wang Wentao, China’s Commerce Minister, met with Australia’s Trade Minister, Don Farrell, on Sunday. China expressed hope that Australia will continue to improve its business climate and provide fair and equitable treatment to Chinese firms.
