- The Australian dollar reached a new eight-month high of 0.6617 on Thursday.
- S&P Australia’s combined PMI increased to 53.6 in July, the highest since April 2022.
- US Treasury Secretary Scott Beast mentioned that the next Federal Reserve Chair candidate might be named in December or January.
The Australian Dollar (AUD) continued to gain against the US Dollar (USD) on Thursday, marking its fifth consecutive day of increases. The AUD/USD pair rose above the 0.6600 mark, climbing to an eight-month high following the release of preliminary data from Australia’s Judo Bank Purchase Manager Index (PMI). Attention now turns to the upcoming speech by the Reserve Bank of Australia (RBA) Governor.
According to Judo Bank and S&P Global, Australia’s combined PMI rose to 53.6 in July, with the services PMI increasing to 53.8 from a prior 51.8. This reflects the fastest growth rate seen in 16 months. Meanwhile, the manufacturing PMI declined slightly to 50.6 from 51.6, although new orders for manufactured goods have picked up, leading to the strongest overall business growth in over three years.
In a recent talk at the Sydney Anica Foundation, RBA Governor Michelle Bullock emphasized the importance of maintaining low and stable inflation.
The AUD/USD pair also benefits from a positive shift in market sentiment, bolstered by recent trade developments. Reports indicate that the European Union and the US are currently engaged in negotiations that involve imposing a 15% tariff on EU goods imported into the US.
Australian Dollar Strengthens as US Dollar Weakens in Risk-On Environment
- The US Dollar Index (DXY), which gauges the US dollar against six major currencies, has dipped to around 97.10 and is currently trading lower. Investors are expected to monitor US S&P Global PMI data later in July.
- Scott Beast, the US Treasury Secretary, indicated that a decision regarding the next Federal Reserve Chair may come in December or January, stating he is “not in a hurry” to appoint a successor to Jerome Powell.
- President Trump recently announced a trade deal with Japan, which includes a 15% tariff on Japanese exports to the US. As part of this agreement, Japan is set to invest $550 billion in the US and increase access for major American products.
- U.S. Treasury Secretary Scott Beast also noted that American and Chinese officials will meet for another high-level discussion in Stockholm next week, following his recent talks in Geneva and London.
- During a meeting with Philippine President Bonbon Marcos, Trump expressed confidence about nearing a trade deal, adding that he doesn’t mind whether the Philippines builds a friendship with China.
- Republican Rep. Anna Paulina Luna has formally accused the Fed Chair of perjury on two occasions.
- Regarding interest rates, Governor Adriana Kugler stated that the US central bank shouldn’t lower rates “for a while,” as the effects of tariffs from the Trump administration start to manifest in consumer prices. She mentioned that maintaining a restrictive monetary policy is crucial for managing inflation psychology.
- San Francisco Fed President Mary Daly remarked last week that anticipating two interest rate cuts this year is a “rational” perspective, while cautioning about prolonged expectations. She forecasted rates settling above 3%, surpassing pre-pandemic neutrality levels.
- Governor Christopher Waller believes the Fed should lower interest rate targets at its July meeting, citing rising economic risks. He warned that delaying action may necessitate more aggressive steps later.
- US Secretary of Commerce Howard Lutnick highlighted a tight deadline for new tariffs beginning August 1, though discussions can continue afterward without immediate duties imposed.
- Minutes from the latest RBA meeting indicated that board members expect further interest rate cuts over time, suggesting patience is needed for signs of inflation slowing before making changes. Most felt that easing rates three times in four meetings was too hasty.
- Westpac shared that its major index reflects weak momentum, with the six-month annual growth rate for the Reading Index falling to 0.03% in June from 0.11% in May, mainly due to lower commodity prices and reduced working hours.
The Australian Dollar Surpasses 0.6600, Reaching an Eight-Month High
The AUD/USD pair traded around 0.6610 on Thursday. Daily chart analysis indicates a continuing bullish trend as the pair operates within a rising channel. The 14-day relative strength index (RSI) is above the 50 mark, signaling active bullish momentum. Additionally, the pair has risen above the nine-day exponential moving average (EMA), suggesting momentum is strengthening.
On the flip side, the AUD/USD pair is eyeing the psychological mark of 0.6650, with the upper channel limit around 0.6680.
Key support for the AUD/USD pair was found at the nine-day EMA of 0.6558. If this level is breached, it might diminish short-term momentum and lead to a test of the 50-day EMA at 0.6503. A further decrease could weaken the medium-term momentum, bringing the pair down to the lower channel limit near 0.6480, followed by a three-week low of 0.6454 recorded on July 17.
AUD/USD: Daily Charts
Australian dollar prices today
The following table highlights the changes in the Australian Dollar (AUD) against major currencies today. The AUD showed the strongest performance against the Canadian dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.05% | -0.01% | -0.31% | 0.05% | -0.24% | -0.18% | -0.05% | |
| EUR | 0.05% | 0.06% | -0.26% | 0.12% | -0.18% | -0.12% | -0.01% | |
| GBP | 0.00% | -0.06% | -0.32% | 0.06% | -0.24% | -0.18% | -0.07% | |
| JPY | 0.31% | 0.26% | 0.32% | 0.36% | 0.06% | 0.07% | 0.10% | |
| CAD | -0.05% | -0.12% | -0.06% | -0.36% | -0.26% | -0.24% | -0.13% | |
| AUD | 0.24% | 0.18% | 0.24% | -0.06% | 0.26% | 0.06% | 0.17% | |
| NZD | 0.18% | 0.12% | 0.18% | -0.07% | 0.24% | -0.06% | 0.11% | |
| CHF | 0.05% | 0.01% | 0.07% | -0.10% | 0.13% | -0.17% | -0.11% |
This heatmap illustrates the rate of change of major currencies against one another. The base currency is from the left column, while the estimated currency is at the top row. For example, selecting the Australian dollar will show the rate of change against the US dollar in the corresponding box.
Australian Dollar FAQ
One vital factor that influences the Australian Dollar (AUD) is determined by the interest rates set by the Reserve Bank of Australia (RBA). Additionally, being a resource-rich nation, fluctuations in iron ore prices significantly affect AUD’s performance, especially since China, as Australia’s largest trading partner, plays a crucial role in determining demand.
The RBA influences the AUD by adjusting interest rates, which affects lending rates across the economy. The primary goal of the RBA is to maintain a stable inflation rate of 2-3% by modulating these rates. Compared to major central banks, higher interest rates generally support the AUD, while lower rates have the opposite effect.
Given that China is Australia’s leading trading partner, the economic stability of China significantly impacts the value of the AUD. A robust Chinese economy typically results in increased demand for Australian resources, which in turn raises AUD’s value. Conversely, slower growth in China often leads to a decrease in AUD value.
Iron ore is Australia’s main export, with China being a significant buyer, accounting for $118 billion annually. Thus, fluctuations in iron ore prices can drive AUD’s value. Generally, rising iron ore prices signal increased demand for AUD, whereas declining prices can harm its value, as they affect Australia’s trade balance positively or negatively.
Trade balances, which reflect the difference between a country’s exports and imports, also play a role in setting the AUD’s value. Higher demand for exports can strengthen the currency, while a negative trade balance can have the opposite effect.
