Australia’s Employment Change came in at -6.6K and the Unemployment Rate increased by 3.8% in March.
US President Joe Biden calls for tripling the existing 7.5% tariff rate on Chinese steel and aluminum.
The decline in the US Treasury yields exerts pressure on the US Dollar.
The Australian Dollar (AUD) continues to gain ground for the second consecutive day on Thursday. The decline in the US Dollar (USD) contributes support for the AUD/USD pair. However, the mixed Australian employment data appear to exert downward pressure on the AUD.
The Australian Dollar gains momentum as the ASX 200 Index continues to climb on Thursday. The domestic equity market is bolstered by gains in mining stocks, supported by firmer metals prices. Additionally, according to a Westpac report, while the Reserve Bank of Australia (RBA) has indicated that rates are unlikely to be raised further, it requires greater confidence in the inflation outlook before contemplating the possibility of rate cuts.
The US Dollar Index (DXY) loses ground, primarily influenced by subdued US Treasury yields. This correction in the US Dollar is further reinforced by renewed selling pressure and an overall risk-on sentiment in the market. Investors watch for the release of weekly Initial Jobless Claims and Existing Home Sales later on Thursday, which could provide further insight into the state of the US economy and potentially impact the direction of the US Dollar.
Australia’s Employment Change posted a reading of -6.6K for March, against the expected 7.2K and 117.6K prior.
Australia’s Unemployment Rate rose to 3.8% in March, lower than the expected 3.9% but higher than the previous reading of 3.7%.
US President Joe Biden spoke at the heart of the American steel industry in Pittsburgh on Wednesday, emphasizing the need for increased pressure on the Chinese steel sector. He has directed US Trade Representative Katherine Tai to consider tripling the current 7.5% tariff rate on Chinese steel and aluminum, as reported by CBS News.
Federal Reserve Bank of Cleveland President Loretta Mester, speaking on Wednesday, acknowledged that inflation has exceeded expectations, and the Fed needs further assurance before confirming the sustainability of 2% inflation. She also stated that monetary policy is well-positioned, with the possibility of a rate cut if labor market conditions worsen.
Fed Governor Michelle Bowman commented on Wednesday that progress in inflation is slowing, with a potential stall. Bowman also noted that monetary policy is currently restrictive, and its sufficiency will be determined over time.
The Federal Reserve’s Beige Book survey of regional business contacts indicates that the US economy has “expanded slightly” since late February. Furthermore, firms reported facing increased challenges in passing on higher costs.
The Australian Dollar traded around 0.6440 on Thursday. The 14-day Relative Strength Index (RSI) suggests a bearish sentiment for the AUD/USD pair as it remains below the 50 level. Key resistance for the pair is anticipated at the 23.6% Fibonacci retracement level of 0.6449, coinciding with the significant level of 0.6450. A breach above this level could strengthen the pair’s momentum, potentially testing the nine-day Exponential Moving Average (EMA) at 0.6475, followed by the psychological barrier of 0.6500. On the downside, notable support is identified at the psychological level of 0.6400. A breach below this level might increase downward pressure on the AUD/USD pair, potentially leading it towards the major support level at 0.6350.
Australian Dollar price today
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the strongest against the US Dollar.
USD
EUR
GBP
CAD
AUD
JPY
NZD
CHF
USD
-0.08%
-0.10%
-0.12%
-0.18%
-0.06%
-0.18%
-0.07%
EUR
0.07%
-0.02%
-0.03%
-0.10%
0.03%
-0.11%
-0.03%
GBP
0.10%
0.03%
-0.02%
-0.08%
0.05%
-0.10%
0.02%
CAD
0.12%
0.03%
0.01%
-0.06%
0.06%
-0.07%
0.03%
AUD
0.21%
0.13%
0.08%
0.10%
0.16%
0.03%
0.12%
JPY
0.06%
-0.02%
-0.05%
-0.07%
-0.11%
-0.12%
-0.03%
NZD
0.19%
0.11%
0.09%
0.08%
0.01%
0.14%
0.11%
CHF
0.10%
0.03%
0.00%
-0.01%
-0.10%
0.05%
-0.11%
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
Inflation FAQs
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.
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