The Australian Dollar (AUD) edges lower against the US Dollar (USD) on Friday. The AUD/USD pair receives downward pressure from stable Greenback amid improved US Treasury yields. However, the downside of the risk-sensitive AUD could be retrained as news of further stimulus from China, its largest trading partner, lifted market sentiment globally.

Australian Treasurer Jim Chalmers is currently in China to strengthen economic ties between the two nations

In terms of resistance, the AUD/USD pair could explore the region around the upper boundary of the ascending channel, around the 0.6990 level.

On the downside, a break below the lower boundary of the ascending channel could weaken the bearish bias and lead the AUD/USD pair to test the nine-day Exponential Moving Average (EMA) at the 0.6832 level. The next significant support is at the psychological level of 0.6700, followed by the six-week low of 0.6622.

According to the Reserve Bank of Australia's Financial Stability Review from September 2024, the Australian financial system remains resilient, with risks largely contained. However, notable concerns include stress in China's financial sector and the limited response from Beijing to address these issues. Domestically, a small but growing portion of Australian home borrowers are falling behind on their payments, though only about 2% of owner-occupier borrowers are at serious risk of default.

The Commonwealth Bank of Australia (CBA) anticipates that the RBA must revise its consumption forecasts downward in November. The RBA has already acknowledged downside risks to its current outlook. This potential revision, combined with expectations of a further rise in unemployment and trimmed mean inflation aligning with CBA's forecasts, could position the RBA to implement rate cuts before the end of the year.

Source: Fxstreet