AUD/USD softens to near 0.6945 in Thursday’s early Asian session. Australia’s trade surplus has contracted significantly to AUD$495 million in August. Markets currently assign a probability of 38.2% to the likelihood of a Federal Reserve rate hike in October. The AUD/USD pair is experiencing slight declines, trading at approximately 0.6945 during the early hours of the Asian session on Thursday. The Australian Dollar edges lower against the US Dollar following Australia’s Trade Balance data. Traders are poised for the release of the US weekly Initial Jobless Claims report, as well as remarks from Federal Reserve officials later today. Data released by the Bureau of Statistics on Thursday indicated that Australia’s Trade Surplus experienced a significant contraction, narrowing to AUD$495 million in August, in contrast to a surplus of A$1,351 million in the prior reading, which was revised from A$1,923 million.
Meanwhile, the country’s exports increased by 3.7% month-on-month in August, compared to a decline of 3.6% previously (revised from -3.3%). Imports increased by 5.8% month-over-month in August, in contrast to a decrease of 2.4% in the prior reading (revised from -2.5%). Conversely, indications of easing inflation in the US have diminished anticipations for a prompt increase in the Federal Reserve’s interest rates. This, in turn, could exert downward pressure on the Greenback and serve as a supportive factor for the pair. The headline Personal Consumption Expenditures Price Index increased by 3.4% year-over-year in August, following a downward revision to 3.4% in July, which was below the market consensus of 3.7%. The Core PCE, which excludes the more volatile food and energy components, increased 3.0% YoY in August, compared to a downwardly revised 3.0% advance in July, falling short of the 3.3% anticipated.
Financial markets currently assign approximately a 38.2% probability to a rate hike in October, a decrease from roughly 45% prior to the release of the US PCE data, as indicated by the CME FedWatch Tool. Commerzbank’s Volkmar Baur cautions that the impact of past RBA tightening is still working its way through the economy, stressing that “interest rate hikes always take effect with a certain time lag, and particularly with regard to the real estate market.” He points to fresh signs of strain in housing, noting that “building permits fell again in August by 6.1% compared to the previous month and prices in the largest cities continue to decline.” Against that backdrop, Baur argues that the “RBA would likely be well advised to wait and see how things develop in the coming months,” reinforcing the view that additional near-term support for the Aussie from further rate hikes may be limited.
In the daily chart, AUD/USD maintains a bearish near-term outlook as the spot remains below the 100-day simple moving average and the Bollinger middle band. Price is positioned just slightly above the lower Bollinger band, indicating that the pair is nearing the lower boundary of its recent range. Meanwhile, the Relative Strength Index (14) at 26.8 resides in oversold territory, suggesting that while downside momentum is extended, it has not yet reversed. On the topside, initial resistance is positioned at the 100-day SMA near 0.7060, with the Bollinger middle band around 0.7100 serving as a secondary barrier before the upper band at 0.7272 becomes relevant. On the downside, immediate support is provided by the lower Bollinger band at 0.6925, and a sustained break beneath this floor would reinforce the prevailing bearish bias, exposing further losses toward lower levels not yet defined by the current indicator set.
