- The Australian dollar is in focus as the Reserve Bank of Australia is set to announce its policy decision on Tuesday.
- The Trump administration has decided to delay the implementation of tariffs on China by another 90 days.
- Forecasts suggest the US consumer price index will rise by 2.8% in July.
On Tuesday, the Australian Dollar (AUD) is holding its ground against the US Dollar (USD) ahead of the interest rate decision from the Reserve Bank of Australia (RBA). The movement of the AUD/USD pair might be influenced by President Donald Trump’s extension of the China tariff deadline.
Most analysts expect the RBA to lower its cash rate by 25 basis points (BPS). Traders will be looking closely at the monetary policy statement, followed by comments from RBA Governor Michele Bullock.
In a concurrent development, the Trump administration has agreed to push back the implementation of tariffs related to China, which is a key trading partner for Australia. This led to China’s Commerce Department announcing its plan to pause extra charges on US goods, coinciding with Trump’s announcement of an extended tariff ceasefire.
The Australian dollar is steady while the US dollar remains stable ahead of CPI data
- The US Dollar Index (DXY), which gauges the dollar’s strength against six major currencies, has stabilized around 98.50 following two days of gains. Traders await consumer inflation data in the North American session.
- Market predictions indicate a roughly 84% chance of a Federal Reserve rate cut in September, according to the CME FedWatch tool.
- Federal Reserve Governor Michelle Bowman mentioned that three rate cuts might be necessary this year, highlighting concerns about a weakening labor market that outweighs potential inflation risks.
- President Trump has named Steven Milan as chairman of the Council of Economic Advisors, replacing Adriana Coogler. Meanwhile, there is speculation about replacing Fed Chair Powell, with Christopher Waller emerging as a leading candidate.
- Mary Daly, President of the San Francisco Federal Reserve, noted that while there has been progress, the Fed needs to tackle inflationary pressures decisively.
- Boston Fed President Susan Collins and Governor’s Committee member Lisa Cook pointed out that ongoing uncertainty complicates effective policy communication and the management of interest rates.
- China’s consumer price index (CPI) remained unchanged year-on-year in July, contrasting with a 0.1% rise in June, surpassing market expectations of a decrease. The Producer Price Index (PPI) fell 3.6% year-on-year, a slight drop from the previous month.
- Trump cautioned China that additional tariffs may be imposed in light of future developments, similar to the 25% tax on Russian oil purchases.
Australia’s Dollar Faces Key Support Around 0.6500
The AUD/USD is trading near 0.6510 today. Analyzing the daily charts signals a potential easing of bullish momentum as the pair tests the lower boundary of an uptrend channel. The 14-day relative strength index (RSI) sits at 50, indicating a neutral stance. Yet, the pair is still above the nine-day exponential moving average (EMA), which suggests that short-term momentum remains robust.
On the upside, the AUD/USD may head towards the upper limit of the rising channel around 0.6570. If it breaks above this point, bullish sentiment could strengthen, allowing the pair to explore psychological levels of 0.6600, followed by a nine-month high of 0.6625 reached on July 24.
Currently, the AUD/USD is testing immediate support at 0.6506, with additional support at 0.6498 for the lower channel boundary and 50-day EMA. A break below this critical support zone could challenge short- and medium-term price momentum, potentially leading to a test of the two-month low of 0.6419 recorded on August 1, followed by a three-month low of 0.6372 from June 23.
AUD/USD: Daily Chart Analysis
Current Australian Dollar Prices
The table below presents the rate of change in the Australian Dollar (AUD) against major currencies today, showing that the AUD is strongest against the Japanese yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.03% | 0.00% | 0.06% | -0.03% | -0.10% | -0.18% | -0.19% | |
| EUR | 0.03% | 0.06% | 0.10% | 0.04% | -0.03% | -0.13% | -0.12% | |
| GBP | -0.01% | -0.06% | 0.14% | -0.02% | -0.09% | -0.16% | -0.18% | |
| JPY | -0.06% | -0.10% | -0.14% | -0.07% | -0.18% | -0.25% | -0.16% | |
| CAD | 0.03% | -0.04% | 0.02% | 0.07% | -0.04% | -0.16% | -0.16% | |
| AUD | 0.10% | 0.03% | 0.09% | 0.18% | 0.04% | -0.10% | -0.09% | |
| NZD | 0.18% | 0.13% | 0.16% | 0.25% | 0.16% | 0.10% | -0.10% | |
| CHF | 0.19% | 0.12% | 0.18% | 0.16% | 0.16% | 0.09% | 0.10% |
The heatmap illustrates the performance of the Australian Dollar (AUD) against major currencies today. The value in each cell reflects the change in the specified currency relative to the AUD.
