The Australian Dollar took another hit against the US Dollar on Wednesday. Investors didn’t like what they heard from the Reserve Bank of Australia. RBA Deputy Governor Andrew Hauser called their policy “restrictive” and admitted the board is still debating its next move. Bottom line: the RBA looks set to keep things tight for longer, and nobody’s sure when that’ll change.
On top of that, RBA Assistant Governor Brad Jones pointed out growing geopolitical risks and some cracks showing in global gold reserves. Even though Westpac Consumer Confidence jumped 12.8% in November, the Australian dollar barely budged. The AUD/USD pair hovered near 0.6520, and buyers just aren’t showing up.
US Dollar Gains as Government Shutdown Nears Resolution
In the meantime, the US dollar is starting to recover. After a five-day decline, the Dollar Index recovered to 99.50. With the Senate passing a bill to resume operations, Washington appears to be on the verge of ending the government shutdown. The news increased the value of the US dollar and increased pressure on the Australian dollar.
Traders are also keeping an eye on what Federal Reserve officials say next. Despite there is a 68% chance that the Fed is likely to lower interest rates by 25 basis points in December. However, the overall state of the US economy is still uncertain, according to the CME Fed Watch Tool.
AUD/USD Tests Key Support Levels
AUD/USD is trapped close to its nine-day EMA at 0.6520, according to the charts. Expect more selling in the direction of 0.6470 if it falls below 0.6500. A short-term increase could be triggered by a push above 0.6535 or 0.6550. Even so, traders are torn between the RBA’s reluctance and indications of stability outside of the US.
