The Australian Dollar (AUD) holds firm against the US Dollar (USD) on Thursday, following mixed Australian trade data and market caution after the US government shutdown. The AUD/USD pair trades around 0.6620, consolidating above the 0.6600 level.
Australia trade data and RBA warnings weigh on sentiment
The Australian Bureau of Statistics reported on Thursday that Australia’s trade surplus narrowed sharply to 1.8 billion AUD in August, far below expectations of 6.5 billion and the previous 7.3 billion. Exports dropped 7.8% month-over-month (MoM), led by weaker gold shipments, while imports rose 3.2% after a decline in July.
Separately, the Reserve Bank of Australia (RBA) released its Financial Stability Review, highlighting risks from elevated asset prices, leveraged trades, and stress in sovereign debt markets. It also warned that China’s struggling property sector continues to weigh on Australian banks. Earlier this week, the RBA kept its Official Cash Rate (OCR) unchanged at 3.6%, with Governor Michele Bullock noting that inflation pressures remain contained but persistent.
US dollar subdued after shutdown, Fed cuts priced in
The US Dollar Index (DXY) trades around 97.70, subdued for a fifth straight session amid expectations that the Federal Reserve (Fed) will cut rates twice this year. Markets are pricing in a 97% probability of an October cut and a 76% chance of another reduction in December, according to the CME FedWatch Tool.
The outlook was reinforced by soft labor market data. ADP reported a 32,000 decline in private-sector payrolls for September, the biggest drop since March 2023. August figures were also revised lower, from a 54,000 gain to a 3,000 loss. Meanwhile, the US government shutdown has delayed key releases such as Nonfarm Payrolls (NFP), leaving traders reliant on Fed commentary.
China risks linger amid mixed data
Conflicting reports over Chinese state-run iron ore purchases added to uncertainty. While Bloomberg reported that China’s Mineral Resources Group ordered steelmakers to halt new purchases from BHP, Mysteel later denied the claim.
China’s September Manufacturing PMI improved to 49.8, above expectations, while the Non-Manufacturing PMI fell slightly to 50.0. The data highlighted a modest improvement in factory activity but softer services growth.
Technical outlook: AUD/USD holds bullish bias above 0.6600
The pair remains supported within an ascending channel, with the 14-day Relative Strength Index (RSI) above 50, reinforcing a bullish bias. Immediate resistance is seen at 0.6707, the 12-month high from September 17, followed by 0.6760 at the channel top.
On the downside, support lies at the 9-day EMA at 0.6598, the 50-day EMA at 0.6558, and the channel’s lower boundary near 0.6540. A break below this zone could shift momentum bearish, exposing the August low at 0.6414.
