The Australian Dollar (AUD) extends its winning streak for the third consecutive session, having recovered from yearlong lows on Monday. The AUD/USD pair continues to rise due to a weaker US Dollar (USD), which could be ascribed to economic data issued by the United States (US) on Friday. Furthermore, the Reserve Bank of Australia (RBA) is expected to boost policy rates at its November 7 meeting.
Australia’s Retail Sales s.a. (MoM) for September surprised the market by being much higher than both the market consensus and the previous reported figure. Australia’s Consumer Price Index (CPI) increased in the third quarter of 2023, topping the increase seen in the second quarter. This increased inflation scenario increases the chance of the Reserve Bank of Australia (RBA) raising interest rates by 25 basis points at its forthcoming policy meeting on November 7.
Following recent setbacks, the US Dollar Index (DXY) is attempting to regain lost territory. The US dollar hit a snag in September when the Core Personal Consumption Expenditures Price Index (YoY) fell. However, the monthly figures reflected an expected rise. The University of Michigan Consumer Index exceeded forecasts but failed to give the US Dollar a boost. This demonstrates that the market expects no interest rate adjustments at the upcoming Federal Open Market Committee (FOMC) meeting.
Retail Sales s.a. (MoM) in Australia were 0.9% in September, much higher than the market consensus of 0.3% and 0.2% earlier. Australia’s Producer Price Index (PPI) fell slightly to 3.8% year on year in the third quarter (Q3), down from 3.9% in the previous quarter. The nation’s PPI jumped to 1.8% on a quarterly basis, a significant increase from the prior estimate of 0.5%. The Australian Consumer Price Index (CPI) increased by 1.2% in the third quarter of 2023, above the previous quarter’s 0.8% increase and the market consensus of 1.1% at the same time.
In October, Australia’s S&P Global Composite PMI fell to 47.3 from 51.5 the previous month. The Manufacturing PMI fell slightly to 48.0 from 48.7 the previous month, while the Services PMI fell into contraction zone, falling to 47.6 from 51.8 the previous month.
The RBA of Australia has voiced increased concern about the inflationary implications of supply disruptions. Michele Bullock, Governor of the Reserve Bank of Australia, stated that if inflation remains above projections, the RBA will consider response policy actions. There is a discernible slowing in demand, and per capita consumption is falling.
The US Core Personal Consumption Expenditures Price Index (YoY) fell to 3.7% in September from 3.8% the previous month. The monthly index, on the other hand, increased to 0.3%, as expected, from 0.1% previously.
The University of Michigan Consumer Index surpassed expectations in October, posting a figure of 63.8 instead of the projected 63.0.
The preliminary US Gross Domestic Product (GDP) Annualized increased by 4.9% in the third quarter, a significant rise from the previous estimate of 2.1% growth and beyond the market expectation of 4.2%. However, there was a decrease in US Core Personal Consumption Expenditures in the third quarter, falling to 2.4% from 3.7% earlier.
On Wednesday, investors will be looking for the US ADP Employment Change for October.
The Australian Dollar is rising, lingering around 0.6340 on Monday, in line with a key hurdle at 0.6350. This movement follows a recovery from the yearly low of 0.6270, which was supported by a critical level near 0.6250. The 21-day Exponential Moving Average (EMA) at 0.6352 is a critical resistance level, after the key milestone at 0.6400. A solid break over this resistance level might send the euro to the 23.6% Fibonacci retracement level at 0.6417.
Please note that this article does not offer any instructions or suggestions regarding investment decisions. Therefore, it is essential that you carefully evaluate your financial situation and conduct thorough analysis, or seek advice from a qualified professional, before making any investment decisions.