Bullock's cautious remarks strongly support the Australian dollar! Will it break through the trend?
2025-10-10 13:53:48
The Australian dollar strengthened against the US dollar on Friday (October 10), partially recovering the previous day's losses and now trading around 0.6565, up about 0.18%. The rise in the Australian dollar against the US dollar was mainly due to the cautious monetary policy statement issued by Reserve Bank of Australia Governor Michelle Bullock.
Chairwoman Bullock noted on Friday that services sector inflation remains sticky. She said second-quarter inflation data slightly exceeded expectations, but overall is moving in the right direction. Given the volatility of monthly CPI data, she emphasized the need for policy prudence and added that the labor market, while still tight, may be balancing.
The Reserve Bank of Australia is widely expected to remain on hold after keeping the official cash rate at 3.6% in September.
The dollar index was steady after four consecutive days of gains, trading around 99.30. The U.S. Senate failed to reach an agreement on legislation to end the government shutdown on Friday.
Minutes from the September Federal Open Market Committee meeting showed that policymakers favored further rate cuts this year. Most policymakers supported the September rate cut and hinted at further easing later this year. However, some members, citing inflation concerns, advocated for a more cautious approach.
According to market expectations of the CME Fed Watch tool, the probability of the Federal Reserve cutting interest rates in October has reached 95%, and the possibility of another rate cut in December is 82%.
Federal Reserve Governor Stephen Milan offered a unique perspective on Tuesday, arguing that inflation is essentially an inevitable consequence of "population growth," adding that monetary policy needs to adjust ahead of the downward trend in the neutral interest rate.
Minneapolis Fed President Neel Kashkari was more reserved, warning that it was too early to judge whether tariff-induced inflation would remain "sticky." However, he emphasized his optimism about the labor market, predicting that recent weak job creation would regain momentum.
Kansas City Fed President Schmid delivered hawkish remarks on Monday, emphasizing that the Fed must maintain its credibility in fighting inflation and pointing out that current inflation levels remain too high. He believes that current monetary policy regulation is appropriate.
China's Ministry of Commerce announced on Thursday that it will strengthen rare earth export controls starting December 1, requiring overseas companies and individuals exporting rare earths to apply for dual-use export licenses.
Australia's private housing approvals fell 2.6% month-on-month to 9,027 in August, in line with expectations and reversing a 1.3% increase in the previous month. Meanwhile, seasonally adjusted building permits fell 6% month-on-month to 14,744, marking the second consecutive month of decline following a 10% drop in the previous month.
Data from the University of Melbourne on Tuesday showed that Australia's West Pacific Consumer Confidence Index fell 3.5% month-on-month to 92.1 in October, a further decline from the previous reading of 3.1%, marking the fastest decline since April this year. ANZ job advertisements fell 3.3% month-on-month in September, a significant deterioration from the previous reading of 0.3%.
The TD Securities-Melbourne Institute inflation gauge rose 0.4% in September from the previous month, reversing a 0.3% drop in the previous month. The annual inflation gauge rose to 3% from 2.8% over the same period.
Technical analysis on the daily chart shows that the Australian dollar is rebounding towards its rising channel, suggesting a revival of bullish momentum. However, the 14-day relative strength index (RSI) remains below its 50 neutral line, indicating that bearish pressure persists.
On the downside, AUD/USD is testing the immediate support of its 50-day exponential moving average (0.6562). A break below this level would weaken medium-term price momentum and could lead to a test of the four-month low of around 0.6414 recorded on August 21, and then to the five-month low of 0.6372.
On the upside, a return to the ascending channel would reactivate the bullish tone and push the Australian dollar against the US dollar to test the first resistance level - the 9-day exponential moving average (0.6581). A successful break above this moving average would improve short-term price momentum and could lead to a test of the 12-month high of 0.6707 set on September 17 last year, and then challenge the upper limit of the channel near 0.6810.
(AUD/USD daily chart, source: Yihuitong)
At 13:53 Beijing time, the Australian dollar was trading at 0.6565/66 against the US dollar.
Chairwoman Bullock noted on Friday that services sector inflation remains sticky. She said second-quarter inflation data slightly exceeded expectations, but overall is moving in the right direction. Given the volatility of monthly CPI data, she emphasized the need for policy prudence and added that the labor market, while still tight, may be balancing.
The Reserve Bank of Australia is widely expected to remain on hold after keeping the official cash rate at 3.6% in September.
Australian dollar strengthens despite steady dollar
The dollar index was steady after four consecutive days of gains, trading around 99.30. The U.S. Senate failed to reach an agreement on legislation to end the government shutdown on Friday.
Minutes from the September Federal Open Market Committee meeting showed that policymakers favored further rate cuts this year. Most policymakers supported the September rate cut and hinted at further easing later this year. However, some members, citing inflation concerns, advocated for a more cautious approach.
According to market expectations of the CME Fed Watch tool, the probability of the Federal Reserve cutting interest rates in October has reached 95%, and the possibility of another rate cut in December is 82%.
Federal Reserve Governor Stephen Milan offered a unique perspective on Tuesday, arguing that inflation is essentially an inevitable consequence of "population growth," adding that monetary policy needs to adjust ahead of the downward trend in the neutral interest rate.
Minneapolis Fed President Neel Kashkari was more reserved, warning that it was too early to judge whether tariff-induced inflation would remain "sticky." However, he emphasized his optimism about the labor market, predicting that recent weak job creation would regain momentum.
Kansas City Fed President Schmid delivered hawkish remarks on Monday, emphasizing that the Fed must maintain its credibility in fighting inflation and pointing out that current inflation levels remain too high. He believes that current monetary policy regulation is appropriate.
China's Ministry of Commerce announced on Thursday that it will strengthen rare earth export controls starting December 1, requiring overseas companies and individuals exporting rare earths to apply for dual-use export licenses.
Australia's private housing approvals fell 2.6% month-on-month to 9,027 in August, in line with expectations and reversing a 1.3% increase in the previous month. Meanwhile, seasonally adjusted building permits fell 6% month-on-month to 14,744, marking the second consecutive month of decline following a 10% drop in the previous month.
Data from the University of Melbourne on Tuesday showed that Australia's West Pacific Consumer Confidence Index fell 3.5% month-on-month to 92.1 in October, a further decline from the previous reading of 3.1%, marking the fastest decline since April this year. ANZ job advertisements fell 3.3% month-on-month in September, a significant deterioration from the previous reading of 0.3%.
The TD Securities-Melbourne Institute inflation gauge rose 0.4% in September from the previous month, reversing a 0.3% drop in the previous month. The annual inflation gauge rose to 3% from 2.8% over the same period.
Technical Analysis
Technical analysis on the daily chart shows that the Australian dollar is rebounding towards its rising channel, suggesting a revival of bullish momentum. However, the 14-day relative strength index (RSI) remains below its 50 neutral line, indicating that bearish pressure persists.
On the downside, AUD/USD is testing the immediate support of its 50-day exponential moving average (0.6562). A break below this level would weaken medium-term price momentum and could lead to a test of the four-month low of around 0.6414 recorded on August 21, and then to the five-month low of 0.6372.
On the upside, a return to the ascending channel would reactivate the bullish tone and push the Australian dollar against the US dollar to test the first resistance level - the 9-day exponential moving average (0.6581). A successful break above this moving average would improve short-term price momentum and could lead to a test of the 12-month high of 0.6707 set on September 17 last year, and then challenge the upper limit of the channel near 0.6810.
(AUD/USD daily chart, source: Yihuitong)
At 13:53 Beijing time, the Australian dollar was trading at 0.6565/66 against the US dollar.
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