AUDUSD holds firm despite disappointing Australian trade data
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Daily Currency Update
AUDUSD gained 0.15% to trade near 0.6625 during Thursday’s European session, showing resilience despite weaker-than-expected trade figures from Australia. Earlier in the day, the Australian Bureau of Statistics revealed that the country’s trade surplus for August narrowed significantly to AUD 1.83 billion. This was well below market expectations of AUD 6.5 billion and a steep decline from July’s surplus of AUD 7.31 billion. Trade balance figures are closely watched as they reflect the difference between a nation’s exports and imports. Australia’s economy relies heavily on exports—particularly commodities like iron ore and coal—making the trade surplus an important indicator of economic health. A smaller surplus suggests lower export revenues, which can weigh on the Australian dollar (AUD). Despite the disappointing data, AUDUSD managed to hold its ground, supported by broader market factors and investor focus on the Reserve Bank of Australia’s (RBA) policy stance. On Tuesday, the RBA kept its Official Cash Rate (OCR) steady at 3.6%, in line with expectations. However, the central bank signalled concern over inflation, stating that price pressures remain more persistent than anticipated. This hawkish tone suggests that the RBA may maintain or even tighten monetary policy further to keep inflation in check, providing some underlying support for the AUD. Looking ahead, market participants will closely watch upcoming economic data and any signals from the RBA on future interest rate moves. The currency’s trajectory will likely hinge on the balance between Australia's trade performance and monetary policy direction, as well as broader risk sentiment in global markets.Key Movers
The US Dollar Index (DXY), which tracks the value of the US dollar compared to a group of major foreign currencies, is having a hard time building on a small gain it made overnight. This small gain came after the dollar hit a one-week low, but overall the dollar isn’t strengthening much right now. One main reason for this is that many investors expect the US Federal Reserve to lower interest rates two more times before the end of the year. Lower interest rates usually make a currency less attractive to investors, which can weaken its value. These expectations grew stronger after new data on US jobs came out on Wednesday, and the report wasn’t good. It showed that private companies actually lost 32,000 jobs in September, which is the biggest drop since March 2023. This was surprising because most months, the US economy adds jobs. Additionally, the previous month’s job numbers for August were revised downward. Originally, it was reported that 54,000 jobs were added in August, but the revised data now shows that the US lost 3,000 jobs instead. This suggests the labor market is not as strong as many thought. On the other hand, there was some slightly positive news from the Institute for Supply Management (ISM), which measures business activity in the manufacturing sector. The Purchasing Managers' Index (PMI) rose from 48.7 in August to 49.1 in September. While this is still below 50 (which indicates contraction), the increase suggests a small improvement in economic activity. Meanwhile, even though the US is experiencing a partial government shutdown—a situation that often causes uncertainty and worry—investors seem relatively calm. This is shown by the mostly positive performance in the stock markets, where traders appear confident despite the political issues. In summary, the US dollar is weak because of worries about the economy and expectations for rate cuts, job reports show signs of a slowing labor market, but some business activity is improving slightly, and markets aren’t too shaken by government shutdown concerns.Expected Ranges
- AUD/USD: 0.6500 - 0.6700 ▲
- AUD/EUR: 0.5500 - 0.5700 ▲
- GBP/AUD: 2.0300 - 2.0500 ▼
- AUD/NZD: 1.1200 - 1.1400 ▲
- AUD/CAD: 0.9100 - 0.9300 ▲