- The Australian dollar saw a decline following the release of the RBA minutes from the May Monetary Policy Conference.
- China’s Caixin Manufacturing PMI dropped to 48.3 in May compared to 50.4 in April, indicating contraction.
- Despite worries surrounding the economy, the US dollar recovered some of its previous losses.
The Australian Dollar (AUD) faced pressure against the US Dollar (USD) on Tuesday, following a nearly 1% gain in the prior session. The value of the AUD/USD pair has been somewhat stable since the release of the Reserve Bank of Australia (RBA) meeting minutes.
The RBA’s minutes highlighted a stronger case for a 25 basis point rate cut, though policymakers preferred to tread cautiously. They acknowledged that US trade policies could negatively impact the global economy, but noted that these concerns hadn’t yet translated into adverse effects for Australia. Interestingly, they weren’t convinced that a 50 basis point cut was necessary.
Sarah Hunter, the RBA’s Deputy Governor, warned that US tariffs could impact global economic conditions. She mentioned that increased uncertainty might dampen investment, production, and employment in Australia, yet suggested that local exporters are positioned relatively well to navigate potential challenges. There’s an expectation that Chinese authorities will step in with fiscal support to bolster the economy.
The Purchasing Manager Index (PMI) for Caixin Manufacturing in China surprisingly fell to 48.3 in May, which was below the anticipated 50.6 and the 50.4 recorded in April. Interestingly, data from the National Bureau of Statistics (NBS) showed an increase in manufacturing to 49.5 in May from 49.0 in April. On the other hand, the non-manufacturing PMI slipped to 50.3 from 50.4, also missing expectations. Given the close trading relationship Australia shares with China, these economic figures can significantly impact the Australian dollar.
Despite these challenges, there’s a chance that the AUD/USD exchange rate may strengthen as the US dollar faces difficulties amid growing inflationary growth concerns. US President Donald Trump even hinted at potentially doubling import tariffs on steel and aluminum, escalating trade tension.
Even with rising economic concerns, the Australian dollar faces depreciation as the US dollar makes a comeback
- The US Dollar Index (DXY), which tracks the value of the dollar against six major currencies, was close to 98.80 at the time of writing. Traders are likely watching for new job opening data being released later Tuesday.
- The ISM Manufacturing Index fell slightly from 48.7 in April to 48.5 in May, which was worse than the expected figure of 49.5.
- At a rally in Pennsylvania, Trump announced plans to significantly increase import tariffs on steel and aluminum as part of ongoing efforts in the trade war, stating that the increase would bolster the US steel industry.
- The U.S. Court of Appeals allowed Trump’s tariffs to proceed, despite a conflicting ruling from the International Trade Court that had recently halted their imposition.
- House Republicans have advanced Trump’s “Big Beautiful Bill,” a considerable tax and expenditure package that may boost the US budget deficit and affect bond yields, causing concerns over the US economy among traders.
- Trump accused China of breaching a recent ceasefire on tariffs, arguing that they did not adhere to the agreements made in Geneva.
- A spokesperson for the Chinese Ministry of Commerce responded by claiming compliance with the agreement and the cancellation of relevant tariffs.
- ANZ reported a 1.2% decline in job advertisements in May, marking a second consecutive monthly drop. The S&P Global Manufacturing PMI also decreased to its lowest since February, falling to 51.0.
- The RBA is expected to consider further interest rate reductions in light of these developments. The bank acknowledged progress in controlling inflation but expressed concerns about US-China trade tensions impacting economic growth.
The Australian Dollar is approaching a nine-day EMA of approximately 0.6450
The AUD/USD currency pair was trading near 0.6468 on Tuesday, indicating a possible bullish trend. Technical analysis shows the pair maintaining a rising channel pattern. If it surpasses the nine-day exponential moving average (EMA), it could signify strengthened short-term momentum. The 14-day relative strength index (RSI) is currently above 50, supporting this bullish sentiment.
Initially, the AUD/USD faced resistance at a seven-month high of 0.6537, recorded on May 26. Breaking through this significant resistance could bolster bullish momentum, potentially pushing it toward the upper limits of the channel around 0.6660.
On the flip side, the primary support level appears to be at the nine-day EMA of 0.6456, followed by a critical support line at around 0.6450. A drop below this zone could undermine the bullish outlook, with the AUD/USD pair possibly testing the 50-day EMA around 0.6393.
AUD/USD: Daily Charts
Australian dollar prices today
The following table illustrates the rate changes for the Australian Dollar (AUD) against major currencies today, showing that the AUD has been particularly weak versus the USD.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.21% | 0.15% | 0.17% | 0.14% | 0.51% | 0.39% | 0.06% | |
| EUR | -0.21% | -0.02% | 0.00% | -0.05% | 0.31% | 0.26% | -0.14% | |
| GBP | -0.15% | 0.02% | 0.00% | -0.01% | 0.34% | 0.29% | -0.11% | |
| JPY | -0.17% | 0.00% | 0.00% | -0.03% | 0.31% | 0.24% | -0.05% | |
| CAD | -0.14% | 0.05% | 0.01% | 0.03% | 0.31% | 0.31% | -0.08% | |
| AUD | -0.51% | -0.31% | -0.34% | -0.31% | -0.31% | -0.05% | -0.45% | |
| NZD | -0.39% | -0.26% | -0.29% | -0.24% | -0.31% | 0.05% | -0.39% | |
| CHF | -0.06% | 0.14% | 0.11% | 0.05% | 0.08% | 0.45% | 0.39% |
The heatmap indicates the rate changes among major currencies. The first column represents the base currency, while the top row indicates the estimated currency. For instance, selecting Australian dollars from the left and moving to US dollars shows the rate change in that box.
