Australian dollar stays stable after revelation of conflicting statistics from China.
Australian dollar (AUD) ends its four-day losing run on Monday while US dollar (USD) edging lower on muted US Treasury yields ahead of the Federal Reserve’s (Fed) interest rate decision on Wednesday.
At its last monetary policy meeting of 2024, the Fed is most likely to issue a 25 basis point rate drop. The CME FedWatch tool indicates that markets are now During the Fed’s December meeting, nearly entirely pricing in a quarter basis point cut.
In contrast to its previous 4.8% and anticipated 4.6% growth, China’s retail sales (YoY) increased 3.0% in November. In the meantime, industrial production rose by 5.4% annually, which was higher than the 5.3% increase predicted by the market.
China’s Retail Sales (YoY) increased 3.0% in November, less than the 4.6% and 4.8% readings that anticipated.
In the face of impending 10% US tariffs that threaten exports, Chinese officials, led by President Xi Jinping, have promised to increase the fiscal deficit target next year and refocus policy on consumption to strengthen the economy. Given that China is Australia’s biggest trading partner, the AUD has been under pressure to decline due to the lack of specific information on fiscal support.
Daily Market Update:The RBA’s dovish attitude pushes the Australian dollar down.
The Reserve Bank of Australia’s (RBA) actions caused further difficulties for the Australian dollar dovish attitude. Investors are placing larger wagers that the RBA will lower interest rates earlier and more sharply than first anticipated. Future choices, however, will be based on facts, and the RBA’s strategy will be guided by changing risk assessments.
From 49.4 in November to 48.2 in December, the preliminary Australia’s Judo Bank Manufacturing Purchasing Managers Index (PMI) fell. In the meantime, the Services PMI decreased from its prior level of 50.5 to 50.4 in December. In December, the Composite PMI fell from 50.2 to 49.9.
Beijing has already started to retaliate against Trump’s economic restrictions by tightening the drone supply chain, restricting the export of vital minerals to the US, threatening to blacklist a US clothing business, and opening an investigation into Nvidia.
The Employment Change, seasonally adjusted, increased by In November, there were 14,535,500 employed persons overall, up from 35,600. In the meantime, the unemployment rate fell below market projections of 4.2% to 3.9%, the lowest level since March.
Following an upwardly revised 0.3% increase in October, the US PPI increased by 0.4% MoM in November, the biggest advance since June. This reading exceeded the anticipated 0.2%.
RBA held its final policy meeting and maintained the Official Cash Rate (OCR) at 4.35%.
In December, the RBA held its final policy meeting and maintained the Official Cash Rate (OCR) at 4.35%. Although the risks of upside inflation have decreased, RBA Governor Michele Bullock emphasized that they still exist and need for constant attention. To inform future policy choices, the RBA will keep a careful eye on all economic data, including employment statistics.
