The Australian dollar slid further against the U.S. dollar on Friday, marking its second straight day of losses. AUD/USD traded around 0.6470 after China’s October trade surplus narrowed to CNY 640.4 billion from CNY 645.47 billion in September. Exports fell 0.8 % year-on-year versus an 8.4 % gain a month earlier, while imports rose just 1.4 % (down from 7.5 %). In dollar terms, China’s surplus came in at USD 90.07 billion, below the USD 95.6 billion expected.
Support for the Australian dollar could come if Washington moves forward with a one-year suspension of shipbuilding tariffs on Chinese goods. The U.S. Trade Representative is soliciting public comments on that plan. Meanwhile, China’s Finance Ministry said it will suspend a 24 % tariff on certain U.S. agricultural imports for one year starting November 10 (a 10 % levy will remain).
Domestically, Australia’s September trade surplus widened to AUD 3,938 million (versus AUD 3,850 million expected), driven by a 7.9 % rise in exports and a 1.1 % increase in imports.
US Dollar Regains Ground on Technical Correction
- The U.S. Dollar Index (DXY) has bounced back toward 99.80 after dropping almost 0.5 % in the previous session. Traders are eyeing Friday’s preliminary Michigan Consumer Sentiment reading, although the ongoing government shutdown continues to curtail official data releases such as Nonfarm Payrolls and the unemployment rate.
- Thursday’s Challenger layoff report—showing 153,000 planned job cuts in October, the highest October tally since 2003—helped push markets toward expecting a December Fed rate cut.
- ADP payrolls surprised to the upside with a gain of 42,000 jobs in October (versus a revised 29,000 decline in September). The ISM services PMI also beat forecasts at 52.4 in October.
- The record-length U.S. government shutdown remains unresolved, as the Senate has no vote scheduled on the House-passed funding bill after it failed for the 14th time.
- St. Louis Fed President Alberto Musalem reiterated that inflation risks remain on the upside, though he expects tariff pressures to ease next year. Fed Chair Jerome Powell has adopted a data-dependent approach, cautioning that a December rate cut is not guaranteed, while Fed Governor Christopher Waller has signaled that another cut could be appropriate.
- In China, the Caixin services PMI dipped to 52.6 in October (from 52.9), and the official manufacturing PMI fell to 50.6 (versus 51.2). Australia’s own S&P Global services PMI rose slightly to 52.5, extending its expansion streak to 21 months.
- The Reserve Bank of Australia left its cash rate unchanged at 3.6 % in November. Governor Michele Bullock stressed that core inflation still exceeds 3 % and that the Board has not discussed cutting rates.
Technical Analysis: AUD/USD under pressure
– AUD/USD is trading near 0.6470 and has broken below the 0.6500 psychological level.
– The pair remains beneath its nine-day EMA (0.6508), indicating short-term bearish momentum.
– Immediate support lies at the lower boundary of a rectangle pattern around 0.6460, followed by the five-month low of 0.6414 and the six-month trough at 0.6372.
– On the upside, the nine-day EMA (0.6508) and the 50-day EMA (0.6535) are the key hurdles. A sustained move above these levels could shift momentum higher toward the rectangle’s upper boundary near 0.6630, and ultimately the 13-month high of 0.6707 recorded on September 17.
