The Australian dollar is currently under pressure due to weak inflation data from China, which is a significant trading partner for Australia. In September, China's producer prices dropped by 2.8%, and the annual inflation rate fell from 0.6% in August to 0.4% in September [5a67d88d]. Economists have deemed China's stimulus measures insufficient, which raises concerns as China accounts for one-third of Australian exports and has a trade-to-GDP ratio exceeding 50% [5a67d88d]. Furthermore, approximately 20% of the Australian workforce is employed in trade-related jobs, making the economy particularly sensitive to fluctuations in Chinese economic performance [5a67d88d].
In addition to the pressures from China, the Australian dollar's value is also influenced by US economic indicators. The Federal Open Market Committee (FOMC) member Christopher Waller is expected to speak on the US labor market and inflation, which could further impact the AUD/USD exchange rate [5a67d88d]. Currently, the AUD/USD remains below the 50-day Exponential Moving Average (EMA) but above the 200-day EMA, indicating a cautious trading environment. A breakout above $0.68006 could signal potential gains for the Australian dollar [5a67d88d].
Moreover, the Australian dollar's performance is closely tied to US inflation trends. If US inflation rises, it could strengthen the AUD, but geopolitical risks, such as potential conflicts, could also play a significant role [88fc1290]. Goldman Sachs has predicted a weak Consumer Price Index (CPI) for the US in September, which may lead to the Federal Reserve considering rate cuts [88fc1290]. Overall, the interplay between Chinese economic data and US inflation will be crucial in determining the future trajectory of the Australian dollar.