The Australian dollar reached its highest levels since February 2023 as part of a broad sell-off in the US dollar following weak US inflation data and China cutting lending rates.
A final break above 0.6900 in AUD/USD breaks the June 2023 high and a series of rallies in this range. It has accelerated higher since then.
AUDUSD 15 minutes
The Australian dollar is particularly being leveraged in China’s improving economy, and the market is excited this week about a series of monetary and fiscal announcements to change China’s average trajectory.
Zooming out, the AUD/USD weekly chart shows a breakout.
AUD/USD weekly
On the US dollar side, lower inflation gives the Fed more room to cut interest rates quickly. The market is roughly evenly split between 50 and 25 basis points for the November 7 FOMC decision. We still have two non-farm payrolls reports before this decision, but they will fluctuate based on incoming economic data and comments from policymakers.
Right now, the bigger topic is China and a potential cyclical recovery in the global economy. This is generally bad for the US dollar, especially at a time when the market was pricing in higher interest rates in the US compared to its G10 counterparts, such as Australia.
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