AUD/USD Price Analysis – Nov 19, 2024
Daily Price Outlook
Following the release of the Reserve Bank of Australia's (RBA) November Meeting Minutes on Tuesday, the Australian Dollar (AUD) remained stable against the US Dollar (USD). According to the minutes, the RBA board is concerned about the possibility of increased inflationary pressures, which underlined the importance of restrictive monetary policy.
Despite recent aggressive pronouncements by Federal Reserve (Fed) officials, the US Dollar (USD) is in a downward correction. However, the Greenback's downside may be limited since investors expect the next Trump administration to prioritize tax cuts and raise tariffs. These policies may increase inflation, limiting the pace of Fed rate decreases.
The US Dollar Index (DXY), a gauge of the USD against a basket of currencies, is presently trading at approximately 106.27. The greenback is struggling to gain ground as the Trump trade appears to be losing steam. However, stronger US economic statistics and cautionary words from the Federal Reserve (Fed) may limit the downside for the USD in the immediate term.
Australian Dollar Gains as RBA Maintains Hawkish Stance on Interest Rates
The Australian Dollar strengthened following hawkish remarks from the Reserve Bank of Australia (RBA). Domestically, the Reserve Bank of Australia (RBA) kept interest rates at 4.35%. RBA Governor Michele Bullock emphasised that existing interest rates are adequately restrictive and will remain so until the central bank is confident in its inflation forecast.
Potential Impact of US-China Trade Tensions on the Australian Dollar
On the Australian front, Donald Trump has threatened to impose 60% tariffs on Chinese products in order to defend US companies and employment. Because China is Australia's largest trading partner, the probable negative spillovers from Trump's policies may cause the Australian Dollar (AUD) to fall.
Meanwhile, China's retail sales increased by 4.8% year on year in October, exceeding the projected 3.8% and the 3.2% growth witnessed in September. Meanwhile, industrial production increased by 5.3% year on year, falling short of the predicted 5.6% and the 5.4% growth seen in the prior period.
Australia's Labor Market Steady, Inflation Expectations Decline
On the economic front, Australia's most recent labour market report showed that the unemployment rate remained stable at 4.1% in October, with a minor gain in employment of 15.9K, all of which supported the perception of a relatively strong labour market.
Australia's seasonally adjusted unemployment rate remained at 4.1% in October, matching market expectations. However, employment change data revealed that just 15.9K new positions were created in October, falling short of the expected 25.0K.
Consumer inflation expectations in Australia fell to 3.8% in November, down from 4.0% the previous month, and reached their lowest level since October 2021.
AUD/USD – Technical Analysis
AUD/USD is trading at $0.65108, up 0.05% as modest bullish momentum dominates the 4-hour chart. The pair is currently holding above the pivot point at $0.64941, signaling a constructive tone.
The 50-day EMA at $0.64805 reinforces the bullish outlook, acting as a dynamic support level, while the RSI at 62 suggests the pair has room for further upside before entering overbought territory. A successful test and hold above $0.64941 could set the stage for an advance toward $0.65463 in the short term, but a failure to maintain this level might lead to a deeper correction.
Traders may look to initiate long positions near the pivot point at $0.64944, targeting $0.65463 with a stop-loss placed at $0.64513 to manage downside risks effectively. However, caution is warranted as the broader market sentiment remains influenced by global risk factors and economic data releases.
Consider a buy limit at $0.64944, with a take-profit target at $0.65463 and a stop-loss at $0.64513 to capitalize on the bullish potential while managing downside risks.
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