- The Australian dollar is expected to strengthen amid a stable US dollar, influenced by fluctuating feelings regarding the Federal Reserve’s future actions.
- AUD gets a boost as Australia’s job statistics lessen the need for the Reserve Bank of Australia to reduce rates in September.
- The US dollar might continue to decline as fresh economic data lends credence to the prospect of interest rate cuts by the Federal Reserve next month.
The Australian dollar (AUD) is set to gain for the second day in a row from Monday. The AUD/USD exchange rate is benefiting from potential headwinds for the US dollar (USD), particularly in light of the generally dovish outlook regarding Federal Reserve policy for September.
Additionally, the recent positive employment figures from Australia in July have alleviated concerns about labor market weaknesses, reducing the pressure on the Reserve Bank of Australia (RBA) to pursue another rate cut in September.
RBA Governor Michele Bullock mentioned last week that current projections indicate a need to lower cash rates to maintain price stability. However, Bullock has refrained from making any firm commitments on rate adjustments, emphasizing a flexible approach that responds to market volatility.
Australian dollar steadies amid dovish outlook for the Fed
- The US Dollar Index (DXY), measuring the USD against six major currencies, shows signs of weakness after dropping previously and is trading around 97.90. The greenback may face further declines as last week’s economic data supports arguments for rate reductions from the Federal Reserve.
- The Trump administration is set to increase tariffs on steel and aluminum imports, effective August 18. This Friday’s update includes a new product code in the US harmonized tariff schedule. Trump also hinted at more announcements regarding steel tariffs and potential new taxes on semiconductor imports.
- President Trump urged Ukraine to seek a peace agreement with Russia, downplaying Russia’s strength in the conflict. His remarks came after reports from a summit in Alaska suggested that Putin sought further territory in Ukraine.
- Michigan’s preliminary consumer index decreased from 61.7 in July to 58.6 in August, falling short of expectations. Meanwhile, US retail sales rose by 0.5% in July, consistent with forecasts but less than the 0.9% increase noted in June.
- US Treasury Secretary Scott Bessent stated in a Wednesday interview that short-term interest rates from the Fed should ideally be between 1.5% and 1.75% lower than the current benchmark. He suggested that the central banks could consider a 50 basis point rate cut in September.
- Trump shared a “paper calculation,” suggesting that the Fed’s interest rate should approach 1%, indicating it should ideally be 3 to 4 points lower, marking them just as theoretical calculations.
- Bessent also mentioned that US and Chinese trade officials are expected to meet again in the coming months to discuss future economic relations, noting that the US may need to see continued progress in controlling fentanyl shipments from China before considering lowering tariffs.
- China’s retail sales grew by 3.7% year-on-year in July, down from previous months’ rates of 4.6% and 4.8%. Industrial production also rose 5.7% year-on-year, though just shy of the anticipated 5.9% and below June’s 6.8% growth.
- Australia’s employment in July increased by 24.5K from the revised 1K in June, nearly matching analyst projections of 25K. The unemployment rate also dropped from 4.3% in June to 4.2%.
- The RBA anticipates a 25 basis point interest rate cut on Tuesday, adjusting the official cash rate to 3.6% from 3.85% at this month’s policy meeting.
AUD/USD starts to rebound after nine days of being under pressure
The AUD/USD exchange rate was around 0.6510 on Monday, and daily chart analysis indicates a potential bullish reversal. The pair looks set to return to an upward trend. It has climbed above the nine-day exponential moving average (EMA), a signal that suggests strengthening short-term momentum. The 14-day relative strength index (RSI) stands at 50, indicating a neutral market bias, but further fluctuations could establish a clearer direction.
A successful return to the upward trend would reinforce a bullish outlook, targeting the monthly highs previously set on August 14. If the pair breaks beyond this, it could encourage movements towards the upper limit of 0.6610 following a nine-month high of 0.6625 recorded on July 24.
On the downside, the immediate support is at a 9-day EMA of 0.6512, followed by a 50-day EMA at 0.6503 and a psychological level of 0.6500. Breaking this support zone could put downward pressure on the AUD/USD pair, possibly revisiting the 0.6419 region last seen on August 1.
AUD/USD Daily Charts
Current Australian dollar prices
The following table displays the shifts in the Australian dollar (AUD) against other major currencies today, with the AUD performing strongest against the Japanese yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.06% | -0.04% | 0.15% | -0.11% | -0.15% | -0.19% | 0.07% | |
| EUR | -0.06% | -0.11% | 0.07% | -0.18% | -0.20% | -0.29% | 0.00% | |
| GBP | 0.04% | 0.11% | 0.08% | -0.06% | -0.09% | -0.18% | 0.07% | |
| JPY | -0.15% | -0.07% | -0.08% | -0.24% | -0.29% | -0.33% | -0.09% | |
| CAD | 0.11% | 0.18% | 0.06% | 0.24% | -0.06% | -0.08% | 0.14% | |
| AUD | 0.15% | 0.20% | 0.09% | 0.29% | 0.06% | -0.08% | 0.17% | |
| NZD | 0.19% | 0.29% | 0.18% | 0.33% | 0.08% | 0.08% | 0.22% | |
| CHF | -0.07% | -0.01% | -0.07% | 0.09% | -0.14% | -0.17% | -0.22% |
The table illustrates the variation rates of each major currency. The selected base currency can be found in the left column, while the estimated currency is displayed across the top row. For instance, if the Australian dollar is selected from the left column and the US dollar is chosen along the top row, the displayed figure represents the rate of change of AUD against USD.
