- The Australian dollar is struggling amid widespread risk aversion and ongoing economic concerns in China.
- Strong Australian economic data lowered expectations for further interest rate cuts by the Reserve Bank last week.
- Traders adopted caution ahead of the data release of the US consumer price index on Wednesday.
The Australian Dollar (AUD) has become weaker against the US Dollar (USD) on Wednesday, overwhelmed by widespread risk aversion. Concerns are growing due to changes in policy by US President Donald Trump, particularly tariffs that have increased the possibility of a prolonged trade war.
Australian Prime Minister Anthony Albanese said on Wednesday that “Australia will not impose mutual tariffs on the US (US).” His remarks follow Trump's decision to implement a 25% tariff on all imported steel and aluminum.
The AUD also faces pressure from ongoing economic uncertainty and sustained risk of deflation in China, Australia's largest trading partner, as traders await major policy announcements from Beijing.
Market participants remain focused on the Reserve Bank of Australia (RBA) policy outlook, particularly after last week's strong economic data reduced expectations for further interest rate cuts. Economic growth surpassed forecasts, marking its first acceleration in more than a year.
The latest RBA meeting minutes highlight that the February rate cuts do not show commitment to continuing mitigation.
Investors are now turning their attention to the February US Consumer Price Index (CPI) release on Wednesday to gain further insight into inflation trends.
The central bank commentary will be short this week as the Federal Reserve is in the power outage period ahead of the March 19 meeting.
The Australian dollar's struggle to escalate global trade tensions places emphasis on market sentiment
- The US Dollar Index (DXY) tracks the US dollar against six major currencies, surpassing approximately 103.50 inches at the time of writing. However, Greenback faced challenges due to the possibility of a slowdown in the US economy.
- President Trump overturned his decision to double tariffs on Canadian steel and aluminum to 50%, a move he announced late Tuesday. However, the White House confirmed to Reuters that the new 25% tariffs on all imported steel and aluminum will come into effect Wednesday, affecting allies, including Canada and Mexico, as well as major US suppliers.
- Trump characterizes the economy as being in a “transition period,” suggesting a potential slowdown. Investors received his remarks as an early signal of the potential for economic turbulence in the near future.
- Last week, Fed Chairman Jerome Powell assured the market that despite growing uncertainty, the central bank doesn't see it need to adjust its monetary policy. San Francisco Fed President Mary Daly reiterated this sentiment, noting that increasing business uncertainty could attenuate demand, but does not justify changes in interest rates.
- RBA lieutenant Governor Andrew Hauser emphasized that the uncertainty in world trade is 50 years high. Hauser warned that uncertainty caused by US President Donald Trump's tariffs could encourage businesses and households to slow down plans and investments that could potentially strain economic growth.
- Bloomberg said on Tuesday that trade and other negotiations between the US and China are at a dead end, citing sources familiar with the issue. Chinese officials say the US has not provided clear measures regarding fentanyl measures necessary for tariff relief. Meanwhile, sources familiar with White House discussions indicated that plans for a face-to-face meeting between the two leaders are currently underway.
- China announced on Saturday that it would impose 100% tariffs on Canadian rapeseed oil, oil cakes and peas, and a 25% tax on Canadian aquatic products and pork. The move comes in retaliation against tariffs introduced by Canada in October, increasing trade tensions. This marks a new front in a broader trade dispute driven by President Donald Trump's tariff policy. The duties are expected to take effect on March 20th.
Technical Analysis: Australian Dollar Tests 9 Day Barrier Nearly 0.6300
The AUD/USD pair traded at nearly 0.6290 on Wednesday, and a technical analysis of the daily chart showing the pair below the nine-day index moving average (EMA) shows it weakens short-term momentum. Additionally, the 14-day relative strength index (RSI) is just below 50, reinforcing the bearish bias.
On the downside, the AUD/USD pair can navigate a minimum of 0.6187 range for five weeks recorded on March 5th.
The AUD/USD pair tests immediate resistance with a 9-day EMA of 0.6294 followed by an EMA of 50-day at 0.6306. A break above this level could strengthen short-term momentum and could potentially push the pair into a three-month high of 0.6408, which was last reached on February 21st.
AUD/USD: Daily Charts
Australian dollar prices today
The table below shows the rate of change in the Australian Dollar (AUD) for today's listed major currencies. The Australian dollar was the weakest against the US dollar.
| USD | EUR | GBP | JPY | CAD | aud | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.19% | 0.20% | 0.21% | 0.09% | 0.21% | 0.25% | 0.11% | |
| EUR | -0.19% | 0.00% | -0.02% | -0.10% | 0.00% | 0.05% | -0.09% | |
| GBP | -0.20% | -0.00% | 0.00% | -0.10% | 0.00% | 0.05% | -0.09% | |
| JPY | -0.21% | 0.02% | 0.00% | -0.12% | 0.00% | 0.03% | -0.08% | |
| CAD | -0.09% | 0.10% | 0.10% | 0.12% | 0.12% | 0.16% | 0.03% | |
| aud | -0.21% | -0.01% | -0.01% | -0.01% | -0.12% | 0.04% | -0.08% | |
| NZD | -0.25% | -0.05% | -0.05% | -0.03% | -0.16% | -0.04% | -0.13% | |
| CHF | -0.11% | 0.09% | 0.09% | 0.08% | -0.03% | 0.08% | 0.13% |
The heatmap shows the rate of change of each other's major currencies. The base currency is selected from the left column, and the estimated currency is selected from the top row. For example, if you select Australian dollars from the left column and move along the horizon to US dollars, the rate of change shown in the box represents AUD (base)/USD (QUOTE).
Economic indicators
Consumer Price Index (Yoy)
Inflation or deflationary trends are measured by periodically summing prices of representative baskets of goods and services and presenting the data as a consumer price index (CPI). CPI data is compiled monthly, US Bureau of Labor Statistics. Yoi's reading compares the price of the product in the reference month with the same month a year ago. CPI is an important indicator for measuring inflation and changes in purchasing trends. Generally speaking, high readings are considered bullish in the US dollar (USD), while low readings are considered bearish.
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