05 Nov 2024

current;-0.66115
target;-0.67500
stoploss;-0.65352

The Australian Dollar remained stable as the Reserve Bank of Australia opted to maintain interest rates at their current level in November.

In October, Australia's Judo Bank Services and Composite PMIs showed improvement, reaching 51.0 and 50.2, respectively.

Meanwhile, the US Dollar encountered difficulties due to the prevailing uncertainty related to the upcoming US presidential election.

The Australian Dollar (AUD) remains stable after experiencing gains in the prior session, attributed to the positive Purchasing Managers Index (PMI) data released on Tuesday. The Reserve Bank of Australia (RBA) has opted to maintain the Official Cash Rate (OCR) at 4.35%, marking the eighth consecutive month of holding rates steady in November. It is anticipated that the central bank will continue to uphold the current rates following its upcoming policy meeting.

Governor Michele Bullock of the Reserve Bank of Australia underscores the necessity of sustaining restrictive interest rates for the time being, given the persistent risks associated with inflation. Although the labor market remains tight, there are indications that wage growth is beginning to moderate.

Australia's Judo Bank Services PMI increased to 51.0 in October, up from 50.6 in the previous month. This result surpassed the market expectation of 50.6. The Composite PMI also saw an improvement, rising to 50.2 in October compared to 49.8 previously. Furthermore, the Caixin China Services PMI advanced to 52.0 in October, up from 50.3 in September.

Investors are expected to pay close attention to the results of the US presidential election. Both former President Donald Trump and Vice President Kamala Harris expressed confidence in their chances of winning as they campaigned throughout Pennsylvania on Monday, the final day of a highly competitive election.

Daily Digest Market Movers: Australian Dollar holds ground after RBA policy decision

Opinion polls indicate that Trump and Harris are nearly tied in their standings. The ultimate outcome may remain uncertain for several days following Tuesday's election. Trump has already suggested that he might contest any unfavorable results, similar to his actions in 2020.

The US dollar (USD) faced challenges due to the uncertainty surrounding the election, with analysts attributing the currency's decline to a Des Moines Register/Mediacom poll that shows Democratic nominee Kamala Harris ahead of Republican candidate Donald Trump by 47% to 44% in Iowa.

Attention will also be focused on the US Federal Reserve’s (Fed) policy decision scheduled for Thursday. The market anticipates a modest reduction of 25 basis points this week, with the CME FedWatch Tool indicating a 99.5% likelihood of a quarter-point rate cut by the Fed in November.

The TD-MI Inflation Gauge experienced a month-over-month increase of 0.3% in October, up from a 0.1% rise in the previous month, marking the highest level since July and occurring just before the RBA's November policy meeting. On an annual basis, the gauge rose by 3.0%, compared to the earlier reading of 2.6%.

ANZ Australia Job Advertisements saw a month-over-month increase of 0.3% in October, a significant deceleration from the upwardly revised 2.3% increase in September. Despite the slower growth, this represents the second consecutive month of gains.

On Sunday, China’s Commerce Minister Wang Wentao held discussions with Australia’s Trade Minister Don Farrell. China expressed its desire for Australia to continue improving its business environment and to ensure fair treatment for Chinese enterprises.

The US Bureau of Labor Statistics (BLS) reported that Nonfarm Payrolls in October rose by only 12,000, following a revised gain of 223,000 in September (down from 254,000), which significantly missed market expectations of 113,000. The Unemployment Rate remained unchanged at 4.1% in October, aligning with consensus forecasts.

Australia's Producer Price Index increased by 0.9% quarter-on-quarter in Q3, following a 1.0% rise in the previous quarter and exceeding market expectations of a 0.7% increase. This marks the 17th consecutive period of producer inflation.

Technical Analysis: Australian Dollar remains below 0.6600, nine-day EMA

AUD/USD trades near 0.6590 on Tuesday, with the daily chart hinting at a potential easing of the bearish trend as the pair tests the nine-day Exponential Moving Average (EMA). However, the 14-day Relative Strength Index (RSI) remains below 50, indicating that the bearish outlook persists.

On the resistance side, AUD/USD faces the nine-day EMA at 0.6596, with further resistance at the 14-day EMA at 0.6618. A break above these levels could strengthen the pair, possibly aiming for a psychological level of 0.6700.

In terms of support, immediate support is around the three-month low at 0.6536. A drop below this level could drive the pair toward the key psychological support at 0.6500.