The Australian dollar enhances the fears of trade tensions between the United States and China.
- The Australian dollar will win the ground before the issuance of salary statements in the United States on Friday.
- AUD receives support from concerns about the trade situation of the United States and China.
- The unemployed demands in the United States increased to 219,000 in the previous week, compared to 213K and 208K expected before.
The Australian dollar (AUD) is exposed to its recent losses against the US dollar (USD) on Friday. The AUD/USD pair is receiving promotional support amid mitigating trade tensions of the United States of China, as US President Donald Trump and Chinese President Xi Jinping have been appointed to discuss the decline in potential tariffs.
China, the main commercial partner in Australia, has retaliated from the new 10 % American tariff that entered into force on Tuesday. However, on Monday afternoon, US President Donald Trump stated that he is likely to speak with China within 24 hours. Trump also warned, “If we could not reach a deal with China, the definitions will be very large.” Despite this, no other updates appeared.
Markets now put a possibility of 95 % of Australia backup rate (RBA) reduced 4.35 % to 4.10 % in February, which weakens AUD flexibility. RBA has retained the official cash price (OCR) by 4.35 % since November 2023, focusing on the fact that inflation should return “sustainable” to its target scope with a rate of 2 % to 3 % before considering any policy dilution.
The Australian dollar may decrease amid the market warning before the US jobs report
- The US dollar index (DXY), which measures the value of the US dollar against six major currencies, rises to approximately 107.70 at the time of writing this report. Greenback can get support because the feelings turn into caution before determining the main job opportunities for American jobs. Traders are preparing for US salary data (NFP) on Friday, which is expected to form the Federal Reserve Monetary Policy (Fed).
- The unemployed demands in the United States increased to 219 thousand for the week ending January 31, and the US Department of Labor (DO) said on Thursday. This publication exceeds the initial estimates of 213K and was higher than the revised flag in the previous week of 208K (from 207K).
- The American ISM Services service fell to 52.8 in January from 54.0 (it was reviewed from 54.1) in December. This reading came under the consensus of the market of 54.3.
- The head of the Federal Reserve in Dallas Lori Logan has occupied the headlines late Thursday, saying that although progress in inflation was great, the American labor market is still very strong for the Federal Reserve to consider price discounts in the future near. Logan also acknowledged that even if the inflation reached a 2 % target, this may not be sufficient on its own to prove the limit of the rate.
- On Thursday, FBI Vice President Philip Jefferson expressed his satisfaction to maintain the rate of federal funds at his current level, saying that he would assess the total effect of Trump’s policies before making more decisions. He also emphasized that the Federal Reserve rate remains restricted to the economy, even with a decrease in 100 points.
- President Trump agreed to a 30 % suspension of proposed definitions by Canadian and Mexican imports. This decision comes after Canadian Prime Minister Justin Trudeau and Mexican President Claudia Shinbom committed to strengthening security measures to address concerns about illegal immigration and drug trafficking.
- The Chinese Ministry of Commerce announced that it will impose a 15 % tariff on the imports of coal and LNG (LNG), as well as an additional tariff of 10 % on crude oil, agricultural equipment, and some cars. In addition, in order to “protect national security interests”, China implements export controls on Tungstin, Tyorium, Ruthenium, Molboom and Related Products.
- The trade surplus in Australia fell to 5,085 million in December, and it lost 7000 meters expected from the previous surplus of 6792 meters. Exports increased by 1.1 % of MOM, slowing from 4.2 % in November, while imports increased by 5.9 % of MOM, up from 1.4 % in the previous month.
- The Composite Composite Directors Index in Australia rose to 51.1 in January from 50.2 in December, which reflects modest growth in private sector activity. Meanwhile, the Judo Bank Service Manager Index increased to 51.2 out of 50.8, representing the twelfth consecutive month of expansion in the services sector. Although growth was moderate, it has been the strongest since August.
The Australian dollar remains fixed less than 0.6300, and the initial support appears in EMA for nine days
AUD/USD hovers near 0.6290 on Friday, while maintaining its location higher than the nine and 14 days (EMAS) on the daily chart, indicating a stronger bullish momentum in the short term. In addition, the 24 -day relative indicator (RSI) remains higher than 50, which enhances the upward trend.
On the upper side, the AUD/USD pair can test the highest level in seven weeks at 0.6330, last time on January 24.
The immediate support in EMA lies for nine days near 0.6260, followed by EMA for 14 days at 0.6254. It can weaken the rest of these levels of the upward view, which is likely to lead the AUD/USD pair about 0.6087 – the lowest level since April 2020, which was recorded on February 3.
Aud/USD: Daily Chart
(This story was corrected on February 7 at 03:00 GMT to say, in the first bullet, the issuance of salary statements in the United States on Friday, not Thursday).
Australian dollar price today
The table below shows the percentage of change in the Australian dollar (AUD) against the main currencies listed today. The Australian dollar was the strongest against the Swiss franc.
| US dollar | euro | GBP | JPY | CAD | Aud | Nzd | Chf | |
|---|---|---|---|---|---|---|---|---|
| US dollar | 0.07 % | 0.06 % | 0.05 % | 0.02 % | -0.09 % | -18 % | 0.15 % | |
| euro | -07 % | -01 % | -0.03 % | -05 % | -16 % | -0.24 % | 0.08 % | |
| GBP | -06 % | 0.01 % | -02 % | -05 % | -0.14 % | -0.23 % | 0.10 % | |
| JPY | -05 % | 0.03 % | 0.02 % | -0.03 % | -0.13 % | -0.24 % | 0.09 % | |
| CAD | -02 % | 0.05 % | 0.05 % | 0.03 % | -0.12 % | -0.19 % | 0.13 % | |
| Aud | 0.09 % | 0.16 % | 0.14 % | 0.13 % | 0.12 % | -0.09 % | 0.25 % | |
| Nzd | 0.18 % | 0.24 % | 0.23 % | 0.24 % | 0.19 % | 0.09 % | 0.33 % | |
| Chf | -0.15 % | -08 % | -0.10 % | -0.09 % | -0.13 % | -0.25 % | -0.33 % |
The heat map shows the percentage changes in the main currencies against each other. The basic currency is chosen from the left column, while the quotation currency is chosen from the top row. For example, if you choose the Australian dollar from the left column and move along the horizontal line to the US dollar, the percentage offered in the box will represent AUD (Base)/USD (Quote).
RBA common questions
The Australian Reserve Bank (RBA) determines interest rates and runs the monetary policy of Australia. Decisions are made by the Council of Governor in 11 meetings per year and allocated emergency meetings as required. The primary mandate in RBA is to maintain the stability of prices, which means an inflation rate of 2-3 %, but also “… to contribute to the stability of the currency, full employment, economic prosperity and the welfare of the Australian people.” Its main performance is by raising or lowering interest rates. The relatively high interest rates will enhance the Australian dollar (AUD) and vice versa. Other RBA tools include quantitative relief and tightening.
While inflation was always believed to be a negative agent of currencies because it reduces the value of money in general, the opposite was already the case in the modern era with the relaxation of capitalist controls across the border. Moderate higher inflation now tends to lead central banks to put interest rates, which in turn has an impact on attracting more capital flows from global investors looking for a profitable place to keep their money. This increases the demand for the local currency, which in the case of Australia is the Australian dollar.
The total economy data is healthy and can have an impact on the value of its currency. Investors prefer to invest their capital in safe and growing economies instead unstable and shrink. Increased capital flows increased total demand and local currency value. Classical indicators, such as gross domestic product, PMIS manufacturing, employment services, and consumer morale surveys on AUD. The strong economy may encourage the Australian Reserve Bank to set interest rates, which also supports AUD.
Quantitative mitigation is a tool used in maximum situations when low interest rates are not sufficient to restore credit flow in the economy. QE is the process that the Australian Reserve Bank (AUD) is printed for the purpose of buying assets-usually government or companies-from financial institutions, and thus providing them with the intensity of the need. QE usually leads to the weaker AUD.
The quantitative tightening (QT) is the opposite of QE. It is implemented after QE when the economic recovery is ongoing and inflation begins to rise. While the RBA Reserve Bank (RBA) purchases government bonds and companies from financial institutions to provide them with liquidity, RBA in QT stops buying more assets, and stops re -investing the maturity manager on the bonds that he already holds. It will be positive (or bullish) for the Australian dollar.
