The Reserve Bank of Australia (RBA) kept interest rates unchanged at 4.35% in its meeting today, marking the eighth consecutive month at this level. The Australian central bank is the only one among major central banks in developed countries, such as the U.S. Federal Reserve, the European Central Bank, the Swiss National Bank, the Bank of Canada, and the Bank of England, that has not yet implemented an accommodative policy (i.e., rate cuts), unlike what is being seen in those other countries.
The Australian dollar continues its downward trend against the U.S. dollar, reaching 0.6372 on Friday, December 6, 2024, its lowest level since August 5, 2024. This pair is currently hovering around 0.6400. The Australian dollar has fallen by about 8% since its peak on September 30, 2024, when it was at 0.6942, to the low recorded on Friday, December 6, at 0.6372.
Several factors are pressuring the Australian dollar, including:
- A decline in Australia’s year-on-year GDP growth in Q3, which registered a 0.8% increase, lower than expected (1.1%) and the previous reading (1.0%).
- Weak Chinese economic data, due to the strong trade partnership between Australia and China. As a result, any negative economic data from China tends to negatively affect the Australian economy and the Australian dollar.
- The strength and resilience of the U.S. economy, which supports the U.S. dollar against all major currencies.
Analysts are closely watching the release of the U.S. Consumer Price Index (CPI) tomorrow, Wednesday. Any reading above expectations for this indicator is likely to negatively impact the Australian dollar/U.S. dollar pair.
From a technical perspective, if the pivot point of 0.6430 for the Australian dollar against the U.S. dollar is broken, the pair may target support levels at 0.6387, 0.6336, and 0.6293. If the pivot point is exceeded, it is likely to target resistance levels at 0.6481, 0.6524, and 0.6575. The Relative Strength Index (RSI) is currently around 37, indicating continued negative momentum for the Australian dollar/U.S. dollar pair.
Please note that this analysis is provided for informational purposes only and should not be considered as investment advice. All trading involves risk.
