- The Australian dollar is expected to weaken as market confidence declines following the US’s attack on three Iranian nuclear facilities.
- In June, Australia’s service PMI rose from 50.6 to 51.3, while the overall PMI increased from 50.5 to 51.2.
- Federal Reserve Governor Christopher Waller indicated that the US Central Bank might begin reducing interest rates soon, as early as next month.
The Australian Dollar (AUD) saw a drop against the US Dollar (USD) on Monday, continuing a slide that spans three sessions. The AUD/USD pair remains under pressure, reflecting diminished risk appetite amid rising tensions in the Middle East.
President Trump disclosed over the weekend that three Iranian nuclear facilities—Fordou, Natanz, and Isfahan—had been targeted in overnight strikes, which were conducted alongside Israeli operations. Following this, the Iranian parliament passed measures possibly aimed at closing the strait. While Iran has previously threatened to close it, Reuters suggests no immediate actions have been taken.
According to S&P Global, the preliminary Australian Manufacturing Purchase Manager Index (PMI) for June stood at 51.0. The service sector’s PMI increased to 51.3, up from 50.6, and the composite PMI also improved from 50.5 to 51.2.
Australian dollars decline due to heightened risk aversion
- The US Dollar Index (DXY), which tracks the US dollar’s performance against six major currencies, is trading around 99.600 as of now.
- Governor Waller mentioned on Friday that the Federal Reserve is likely to ease monetary policy soon, possibly next month.
- The Federal Reserve has maintained interest rates at 4.5% as expected in June. The Federal Open Market Committee (FOMC) is forecasting about a 50 basis point cut by the end of 2025. However, Chairman Jerome Powell cautioned that the Fed remains in wait-and-see mode, and any rate reductions will hinge on further improvements in labor and inflation metrics.
- On Friday, the People’s Bank of China (PBOC) decided to keep the loan prime rate (LPR) unchanged at 3.00% for 1-year and 3.50% for 5-year loans.
- In May, China’s retail sales rose 6.4% year-on-year, beating predictions of a 5.0% increase, and an April figure of 5.1%. Conversely, industrial production increased by 5.8% year-over-year, which was below the expected 5.9% and April’s 6.1%.
- The National Bureau of Statistics (NBS) in China indicated that the domestic economy is generally anticipated to remain stable for the first half of 2025. However, growth may be under pressure starting in the second quarter due to uncertain trade policies.
- The Australian Bureau of Statistics revealed on Thursday that employment fell by 2,500 in May, following a revised increase of 87,600 (previously reported as 89,000) and an increase of 25,000 in April. The unemployment rate remained unchanged at 4.1% in May.
Australian dollars fall below 50-day EMA near 0.6500
The AUD/USD is trading around 0.6430 on Monday. Technical analysis shows that this pair has broken below a rising channel pattern, which could indicate more bearish trends. Additionally, the 14-day relative strength index (RSI) is below 50, which adds to the bearish sentiment. The pair also sits beneath the nine-day exponential moving average (EMA), suggesting weakened short-term price momentum.
Should the AUD/USD pair decline further, it might test support levels around 0.6400. A break below this threshold could lead the pair toward the region surrounding 0.5914, the lowest point marked since March 2020.
The main resistance level appears to be the 50-day EMA around 0.6432, followed by the lower boundary of the ascending channel at approximately 0.6450. If the pair can rebound within this channel, it could restore some bullish sentiment and facilitate a test of the nine-day EMA at 0.6474. A successful breach of this level could bolster bullish feelings, pushing the AUD/USD closer to its seven-month peak of 0.6552, reached on June 16.
AUD/USD: Daily Charts
Australian dollar prices today
Here’s a look at today’s changes in the Australian Dollar (AUD) against major currencies. The AUD was weakest against the euro.
| USD | EUR | GBP | JPY | CAD | aud | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.30% | -0.10% | 0.16% | 0.06% | 0.39% | 0.41% | 0.09% | |
| EUR | 0.30% | 0.18% | 0.52% | 0.37% | 0.66% | 0.72% | 0.36% | |
| GBP | 0.10% | -0.18% | 0.37% | 0.19% | 0.47% | 0.54% | 0.17% | |
| JPY | -0.16% | -0.52% | -0.37% | -0.12% | 0.19% | 0.30% | -0.16% | |
| CAD | -0.06% | -0.37% | -0.19% | 0.12% | 0.37% | 0.35% | -0.01% | |
| aud | -0.39% | -0.66% | -0.47% | -0.19% | -0.37% | 0.05% | -0.29% | |
| NZD | -0.41% | -0.72% | -0.54% | -0.30% | -0.35% | -0.05% | -0.36% | |
| CHF | -0.09% | -0.36% | -0.17% | 0.16% | 0.01% | 0.29% | 0.36% |
The heatmap illustrates the changes in the rates of major currencies against the selected base currency. By selecting AUD from the left and moving across to USD in the top row, one can find the change rate for that specific pair.
Risks of sentiment FAQ
In finance, “risk-on” and “risk-off” refer to the willingness of investors to take on risk during a certain time frame. When in a “risk-on” phase, investors are generally optimistic, while in a “risk-off” phase, they tend to shy away from riskier investments in favor of safer assets.
Typically, in a “risk-on” environment, stock markets trend upwards, and most commodities benefit—gold being an exception. Countries that are large exporters of commodities often see their currencies strengthen as demand rises, leading to increases in cryptocurrencies as well.
Minor currencies like the AUD, CAD, and NZD tend to appreciate in “risk-on” environments because their economies heavily rely on exporting goods, which are in higher demand during these times.
Contrarily, during “risk-off” periods, major currencies such as the USD, JPY, and CHF often gain value. This is because the USD is viewed as a safe haven, with investors turning to US government debt in times of crisis. The yen also sees increased demand as many investors prefer holding Japanese government bonds.
