- The Australian dollar saw a decline after hitting a peak of 0.6676, a level not reached in 10 months, on Tuesday.
- On Monday, the US and China finalized a commercial deal over TikTok, resulting in its transition to US ownership.
- The US dollar continued to slide, as expectations build that the Federal Reserve will implement a 25 basis point rate cut.
On Tuesday, the Australian dollar (AUD) is set to weaken against the US dollar (USD) after a positive session prior. The AUD/USD pairing gained traction as the USD faced challenges, particularly with a crucial Federal Reserve policy meeting approaching on Wednesday.
The AUD might have found some footing following a US-China agreement regarding TikTok, with communication between US President Trump and Chinese President Xi Jinping indicating a favorable outcome. Trump noted on “Social Truth” that a significant trade dialogue was fruitful, stating that US-China ties continue to remain “very strong.”
According to Sarah Hunter from the Reserve Bank of Australia (RBA), the central bank is nearing its inflation targets. She remarked that the overall risks are relatively balanced, emphasizing the need to look ahead due to the delayed effects of monetary policy. Monitoring consumer spending is key for the RBA, as it aims to bring the economy closer to full employment.
As the Australian dollar faces potential downturns, the RBA’s anticipated lack of further rate cuts seems to offer it some support. Current swaps suggest an 86% likelihood of no policy changes in September, backed up by a robust July trade surplus, satisfactory second-quarter GDP, and significant inflation figures from July. Moreover, rising consumer inflation expectations in September are heightening concerns about new inflationary trends.
Despite a risk-responsive atmosphere, the Australian dollar struggles
- The US Dollar Index (DXY), which gauges the USD against six major currencies, has continued to lose ground, hovering around 97.20. Investors are looking ahead to US retail sales data for August, which is set to release on Tuesday, for insights into consumer behavior.
- The US Senate has confirmed Stephen Milan to fill a recent vacancy on the Federal Reserve’s board with a narrow 48-47 vote—the first executive member since 1935.
- The Federal Reserve is thought to be on course for a 25 basis point reduction in September, but the possibility of a 50-point cut hasn’t been ruled out. The market is projecting continued easing through 2026, reducing the chances of an impending recession.
- Both Morgan Stanley and Deutsche Bank foresee the Fed implementing three rate reductions this year, following new data that suggests inflationary pressures are lessening. They’ve each forecasted a 25-point cut at the Fed’s meetings in September, October, and December.
- Following a rise in initial unemployment claims to the highest level since October 2021, traders are increasingly optimistic about potential rate cuts from the Fed after last week’s disappointing non-farm payroll report.
- On Monday, China’s National Bureau of Statistics announced expectations for retail sales to grow by 3.8% and 3.7% in July, which is modestly better than the 3.4% year-on-year increase projected for August. Industrial production rose by 5.2% year-on-year over the same period, falling short of a 5.8% forecast and a previous 5.7% rate.
- During a press conference on Monday, the NBS noted that while economic conditions remained stable in August, domestic demand is expected to strengthen and might lead to rising prices. They also acknowledged a challenging external environment impacting some companies’ operations.
Australian Dollar Eyes 11-Month Highs Near 0.6700
As of Tuesday, AUD/USD is trading around 0.6660. Technical analysis suggests the pair is on an upward trajectory within rising channel patterns, hinting at a bullish market sentiment. Additionally, it’s positioned above the nine-day exponential moving average (EMA), indicating robust short-term price momentum.
The goal for the AUD/USD pair appears to be reaching an 11-month high of 0.6687, noted in November 2024, with an upper channel boundary around 0.6700.
Initial support for the AUD/USD pair is anticipated at the nine-day EMA of 0.6621, followed by a tighter limit of 0.6570. Should the price dip below this channel, short-term momentum could weaken, prompting a test of the 50-day EMA around 0.6535.
AUD/USD: Daily Charts
Australian dollar prices today
The following table reflects the Australian Dollar’s (AUD) shifts against major currencies today. It’s worth noting that the AUD has notably underperformed against the Japanese yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.15% | -0.15% | -0.22% | -0.06% | 0.04% | 0.08% | -0.14% | |
| EUR | 0.15% | -0.00% | -0.21% | 0.08% | 0.24% | 0.21% | 0.00% | |
| GBP | 0.15% | 0.00% | -0.16% | 0.09% | 0.25% | 0.22% | -0.01% | |
| JPY | 0.22% | 0.21% | 0.16% | 0.24% | 0.33% | 0.13% | 0.13% | |
| CAD | 0.06% | -0.08% | -0.09% | -0.24% | 0.10% | 0.10% | -0.08% | |
| AUD | -0.04% | -0.24% | -0.25% | -0.33% | -0.10% | 0.06% | -0.23% | |
| NZD | -0.08% | -0.21% | -0.22% | -0.13% | -0.10% | -0.06% | -0.17% | |
| CHF | 0.14% | -0.01% | 0.00% | -0.13% | 0.08% | 0.23% | 0.17% |
This table illustrates the rate of change for the listed major currencies, with the AUD as the base currency on the left and the target currencies represented along the top.
