The final quarter of the 2024 trading year has seen the Aussie take a strong move down, losing over 7% from the annual high at 0.6942 to see it challenge the annual low just under 0.6350 as we approach the final trading month. Much of the move can be attributed to the strength that the US dollar has seen over the period which initially came from a sharp pull back in Fed rate cut expectations and has been exacerbated by Donald Trump’s election victory.
The Reserve Bank of Australia has not made any interest rate moves over the last quarter or indeed the last year and rates have remained at a post-Covid high of 4.35% despite many other major central banks embarking on easing cycles, including the Federal Reserve. This has mainly occurred as inflation has remained persistent although recent CPI prints have been moving lower and many Australian households will be hoping that this could lead to rate cuts in the new year.
Concerns on global growth in general and on Chinese and Asia Pacific markets specifically have also led to a negative sentiment for the Aussie. As a strong trading partner with China, the Aussie dollar is often traded as a proxy currency on Chinese sentiment and given President elect Trumps recent tariff announcements, the market is expecting any implementation of those tariffs to put further pressure on the Aussie in the coming months.
The Aussie dollar is currently trading just above trendline support on the Daily chart which comes in just above the 64-cent level with a break there anticipated to see a quick challenge of the 2024 low at 0.6346 and then the 2023 low at 0.6268. Traders are expecting rallies to be limited over the short term and there would need to be a significant change in the underlying fundamentals to alter the current trend. Initial resistance now sits at the 200-Day Moving average at 0.6627 with longer term resistance now at the topside trendline just under 69 cents.
