- Australian currency faces challenges as RBA’s Bullock cautions about persistent inflation risks.
- China’s consumer price index saw a modest increase of 0.1% year-on-year, while it dipped by 0.1% month-on-month in June.
- President Trump is likely to announce significant tariffs, including a potential 50% tariff on imported copper and a staggering 200% on pharmaceutical imports.
The Australian dollar (AUD) has been trending against the USD, experiencing gains on Wednesday for a second consecutive session. The AUD/USD pair received attention as the Governor of the Reserve Bank of Australia (RBA), Michele Brock, noted that inflation risks remain due to increasing labor costs and declining productivity.
Brock mentioned that the full effects of a previous 50 basis points rate cut have yet to be fully felt. She anticipates more developments and data will emerge by the next meeting. On Tuesday, the RBA maintained its official cash rate (OCR) at 3.85%, defying earlier expectations for a 25 basis points cut in July.
A Reuters survey indicated that all 30 economists anticipated the RBA would reduce rates by 25 basis points to 3.60% in August. Major Australian banks, including ANZ, CBA, NAB, and Westpac, also support this forecast.
In China, the consumer price index saw a year-on-year increase of 0.1% in June, following a 0.1% drop in May, with a market expectation of 0% for this period. Additionally, the monthly CPI dropped by 0.1%, contrasting with the expected zero change. The producer price index (PPI) also fell, dropping 3.3% in May and 3.6% in June, below the anticipated 3.2%.
Andrew Hauser, the RBA’s deputy governor, expressed concerns about the vast uncertainty plaguing the global economy. He noted his surprise at how markets seem to be brushing this off. He added that tariffs might heavily impact global growth.
Australian dollar makes strides despite a strong US dollar amid ongoing tariff concerns
- The US Dollar Index (DXY), which gauges the value of the US dollar against six primary currencies, has remained steady after two days of gains, trading around 97.60. Traders are likely watching the forthcoming Federal Open Market Committee (FOMC) minutes after the North American session.
- On Tuesday, President Trump announced a 50% tariff on copper imports, suggesting an increase in sector-specific taxes. He also mentioned impending tariffs on drug imports at possibly 200%.
- According to US Treasury Secretary Scott Bescent, the US has accrued around $100 billion in tariff revenue this year, and this could reach $300 billion by 2025 due to escalating trade policies under President Trump.
- The White House recently confirmed Trump signed an executive order postponing new tariffs until August 1. He updated the existing 25% tax on imports from Japan and South Korea and issued letters to global leaders emphasizing the upcoming taxes. Countries like Malaysia, Kazakhstan, and Tunisia will see 25% tariffs, while South Africa faces 30% and Laos and Myanmar 40%.
- Trump also stated that countries aligned with BRICS’s anti-American stance would incur an additional 10% tariff, with no exceptions.
- The People’s Bank of China (PBOC) is preparing to facilitate capital market openings, enabling more local investors to engage in offshore bonds. This move may double the quota for their southbound bond connectivity program to around $139 billion, which is significant for trade relations with Australia.
- Reports suggest China is increasingly rerouting exports via Southeast Asia to evade US tariffs. In May, direct shipments from China to the US fell by 43%, despite an overall export increase of 4.8% in China. Exports to Southeast Asia surged by 15%, while exports to the EU rose by 12%. However, a US trade deal with Vietnam includes a 40% tariff on re-exported goods to counter these practices.
- Australia’s Treasurer Jim Chalmers stated that the RBA’s decision to maintain interest rates wasn’t what most Australians or the market were anticipating. Chalmers emphasized that central banks should provide clearer guidance on inflation and interest rate trajectories.
Australian dollars eye 9-day EMA barriers after surpassing 0.6500
The AUD/USD pair is trading at approximately 0.6530 on Wednesday, showing some bullish sentiment reflected in the ascending channel pattern. While the 14-day relative strength index (RSI) is slightly above 50, indicating a positive outlook, the pair remains below the nine-day exponential moving average (EMA), suggesting weaker short-term momentum.
The AUD/USD aims for a key 9-day EMA barrier at 0.6535. A successful break above this could enhance short-term price strength, possibly leading the pair towards the eight-month high of 0.6590 recorded on July 1. Further gains may lead to tests around the upper limit of the ascending channel near 0.6680.
Conversely, the pair might find initial support near the lower boundary of 0.6510 within the ascending channel, followed by a 50-day EMA at 0.6475. A drop below this critical support zone may weaken the medium-term outlook and push the pair towards its two-month low at 0.6372.
AUD/USD: Daily Charts
Australian dollar prices today
The following table displays the rate of change in the Australian Dollar (AUD) against today’s major currencies. The AUD was notably strong against the Japanese yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.01% | -0.05% | 0.21% | 0.07% | -0.14% | -0.12% | -0.06% | |
| EUR | -0.01% | -0.05% | 0.19% | 0.06% | -0.11% | -0.14% | 0.04% | |
| GBP | 0.05% | 0.05% | 0.28% | 0.12% | -0.11% | -0.14% | 0.00% | |
| JPY | -0.21% | -0.19% | -0.28% | -0.17% | -0.35% | -0.35% | -0.27% | |
| CAD | -0.07% | -0.06% | -0.12% | 0.17% | -0.15% | -0.19% | -0.02% | |
| AUD | 0.14% | 0.11% | 0.11% | 0.35% | 0.15% | -0.02% | 0.16% | |
| NZD | 0.12% | 0.14% | 0.14% | 0.35% | 0.19% | 0.02% | 0.14% | |
| CHF | 0.06% | -0.04% | -0.00% | 0.27% | 0.02% | -0.16% | -0.14% |
The heatmap illustrates the fluctuation rates among major currencies against each other. The base currency is selected from the left column, and the estimated currency is chosen from the top row. For example, selecting Australian dollars yields a rate of change against USD displayed in the corresponding box.
Australian Dollar FAQ
Interest rates set by the Reserve Bank of Australia (RBA) are fundamental to the Australian Dollar (AUD). As a country rich in resources, iron ore prices, the largest export, also play a significant role. The economic health of China, Australia’s biggest trading partner, affects inflation, growth rates, and trade balance. Additionally, market sentiment impacts whether investors are seeking riskier assets or safe havens, which can potentially benefit the AUD.
The RBA influences the AUD by regulating the interest rates at which Australian banks lend to one another, thereby impacting rates across the economy. Its main objective is to sustain a stable inflation rate of 2-3% by adjusting rates. Compared to other central banks, higher interest rates generally bolster the AUD, while lower rates can weaken it. Additionally, quantitative easing or tightening measures can further affect credit conditions.
Given that China is Australia’s largest trading partner, the economic performance of China significantly impacts the AUD’s value. A robust Chinese economy will increase demand for Australian goods, boosting the AUD’s value. Conversely, slower growth in China can decrease demand for Australian exports, negatively affecting the currency.
Iron ore, accounting for substantial exports mainly to China, plays a critical role in the AUD’s value. Typically, rising iron ore prices lead to an increase in demand for AUD, while falling prices can have the opposite effect. In addition, higher iron ore prices generally improve Australia’s trade balance, which is also favorable for the AUD.
Trade balances—which compare export earnings against import expenditures—affect the AUD’s value as well. A positive net trade balance, stemming from high demand for popular exports, typically strengthens the currency, while a negative balance can weaken it.
