Australian Dollar Expected to Decline Amid US Dollar Recovery
- The Australian dollar is set to weaken as the US dollar recovers its recent losses.
- The AUD is expected to find some support, especially since the Reserve Bank of Australia (RBA) is likely to maintain its current policy in September.
- Traders are anticipating the release of the Michigan Consumer Sentiment Index, which is due out on Friday.
The Australian Dollar (AUD) is projected to gain against the US Dollar (USD) on Friday, extending gains for a third straight session. The AUD/USD pair seems to be benefiting from a potential rate cut of 25 basis points next week, as disappointing US employment data overshadows rising inflation, bolstering expectations from the Federal Reserve. There’s even a significant possibility that the US Central Bank might opt for a half-point cut.
Recent strong economic indicators from Australia are providing support for the AUD, as these have led to a decreased likelihood of further rate cuts from the RBA, with market swaps pricing almost 86% that the policy will remain unchanged in September.
Notably, Australia’s consumer inflation expectations rose from a five-month low of 3.9% in August to 4.7% in September. This uptick can be attributed to increasing domestic demand, raising risks of new inflationary pressures. According to RBA Governor Michele Bullock, the private sector has started showing “a little more growth.”
Positive Market Sentiment Boosts Australian Dollar
- The US Dollar Index (DXY), which measures the strength of the US dollar against six major currencies, is trading around 97.60 at the time of writing. The release of the University of Michigan Consumer Sentiment Index will be a focal point for the latter half of Friday.
- The US Consumer Price Index (CPI) increased by 2.9% year-on-year in August, aligning with expectations, but higher than the 2.7% noted in July. Monthly inflation picked up to 0.4% from a previous increase of 0.2%. Core CPI, which excludes food and energy prices, rose 3.1% year-on-year in August, consistent with projections.
- Unemployment claims in the US rose to 263K, their highest level since 2021, exceeding the expected 235K compared to the prior revised figure of 236K.
- According to the U.S. Bureau of Labor Statistics (BLS), PPI inflation in the US fell from 3.3% in July to 2.6% in August, which was below market consensus. Monthly PPI decreased by 0.1% in August, contrasting with a 0.7% increase that was revised from 0.9%.
- Preliminary estimates from the BLS regarding the national benchmarks of current Employment Statistics suggest that total agricultural employment in March 2025 could be revised to around 911,000, indicating a weaker labor market than previously thought. The final revisions will be published in February 2026.
- China’s Consumer Price Index (CPI) dropped by 0.4% year-on-year in August after remaining flat in July, against a consensus expectation of a 0.2% decrease. Monthly CPI inflation was reported at 0%, up from 0.4%, contrary to an anticipated 0.1%. Changes in China’s economy could influence the AUD, given their close trading relationship.
- Matthew Hassan, head of macro forecasting in Australia, noted that the recovery in consumer sentiment since mid-2024 has slowed, as demonstrated by Westpac’s consumer confidence index dropping from 98.5 to 95.4 in August. He indicated that more policy easing might be necessary, forecasting a 25-basis-point cut from the RBA in November, along with two additional cuts in 2026.
Australian Dollar Eyes Key Resistance Levels
Currently, AUD/USD is hovering around 0.6660. Technical analysis suggests an upward movement within a rising channel pattern, which supports a bullish outlook. Furthermore, the pair sits above the nine-day exponential moving average (EMA), indicating solid short-term momentum in pricing.
However, the AUD/USD is eyeing the upper boundary of this ascending channel, around 0.6680, followed by significant psychological levels from eleven-month highs of 0.6687 and 0.6700 recorded back in November 2024.
Initial support is positioned at the nine-day EMA of 0.6598, with further support at the channel’s lower limit of 0.6560. A breach below this channel could dampen bullish sentiment and prompt the pair to test the 50-day EMA at 0.6524.
AUD/USD: Daily Charts
Today’s Australian Dollar Prices
The following table displays how the Australian Dollar (AUD) has changed against various major currencies today. Currently, the AUD is performing the weakest against the US dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.10% | 0.13% | 0.18% | 0.10% | -0.02% | 0.09% | 0.10% | |
| EUR | -0.10% | 0.04% | 0.07% | 0.02% | -0.10% | 0.00% | 0.02% | |
| GBP | -0.13% | -0.04% | 0.04% | -0.03% | -0.17% | -0.02% | -0.01% | |
| JPY | -0.18% | -0.07% | -0.04% | -0.07% | -0.19% | -0.13% | -0.11% | |
| CAD | -0.10% | -0.02% | 0.03% | 0.07% | -0.08% | 0.00% | 0.01% | |
| AUD | 0.02% | 0.10% | 0.17% | 0.19% | 0.08% | 0.14% | 0.12% | |
| NZD | -0.09% | -0.00% | 0.02% | 0.13% | -0.01% | -0.14% | 0.01% | |
| CHF | -0.10% | -0.02% | 0.01% | 0.11% | -0.01% | -0.12% | -0.01% |
The table illustrates the percentage change in the Australian Dollar against other major currencies today. The base currency is from the left column, while the currency being compared is at the top. For instance, if one looks at AUD against USD, the value shows how much the AUD has changed relative to the USD.
