AUD/USD falls on triggered risk aversion

Australian dollar was trading lower against its US counterpart on Friday, as market players curbed appetite for riskier assets, such as the Aussie, and focused on the upcoming policy meeting by the Federal Reserve next week, in pursuit for clues of banks next move on stimulus.

AUD/USD fell to a session low at 0.9584 at 0:30 GMT, after which consolidation followed at 0.9596, losing 0.28% for the day. Support was likely to be received at October 17th low, 0.9528, while resistance was to be encountered at October 23rd high and also highest point in five months, 0.9756.

On Wednesday it became clear that Australian index of consumer prices (CPI) beat analysts’ projections during the third quarter of the year. The CPI rose 2.2% in Q3 on annual basis, while expectations pointed a 1.8% advance. The quarterly consumer price inflation climbed 1.2% in Q3, again above the preliminary estimates. Following these numbers, concerns eased that the Reserve bank of Australia will consider another cut in its benchmark rate.

On Thursday the Aussie, alongside the New Zealand dollar, found support following the release of optimistic manufacturing data out of China, Australias largest export market. According to a report by HSBC, the preliminary value of the Chinese manufacturing PMI climbed to 50.9 in October, reaching its highest point in seven months. The final value of this index stood at 50.2 in September, below the flash value of 51.2. Experts had projected that the index will advance to 50.5.

In addition, the yield on Australian benchmark 10-year bonds decreased 2 basis points, or 0.02 percentage point, to reach 3.97%. Yields have fallen 15 basis points during the week, according to Bloomberg.

The Aussie was poised to register its first weekly decline in October against the US dollar before the release of US durable goods orders and the index of consumer sentiment, another set of crucial data points, which may add to prospects when the Federal Reserve Bank will consider scaling back the monthly pace of its asset purchases.

Meanwhile, the Australian dollar was lower against the euro, with EUR/AUD cross advancing 0.44% on a daily basis to trade at 1.4411 at 8:31 GMT. AUD/NZD pair was gaining 0.24% to trade at 1.1552 at 8:32 GMT. The kiwi was set to record its longest series of weekly declines against the Australian peer in more than one year, as Reserve Bank of New Zealand signaled hesitation to increase its benchmark rate. Traders saw a 65% probability that New Zealands central bank will raise its base interest rate by the end of April next year. The odds that the Reserve Bank of Australia will reduce borrowing costs by that same month were 34%, according to swap data by Bloomberg News.