The Australian Dollar Remains Steady After Recent Gains

• The Australian Dollar holds its position after recently posting nearly 0.5%.
• As expected, Australia’s wage price index rose by 0.8% QOQ.
• The US consumer price index rose 2.7% year-on-year, while the annual CORE CPI rose 3.1% in July.

The Australian Dollar (AUD) is unlikely to see much movement on Wednesday after showing gains in the previous session. The AUD/USD pair seems to be holding steady following the second quarter’s wage price index data release. The Australian dollar has been facing headwinds since the Reserve Bank of Australia (RBA) cut interest rates for the third time this year, signaling easing inflation and a slight cooling of the labor market.

As anticipated, Australia’s wage price index increased by 0.8% quarterly for the second quarter, which is a bit lower than the previous 0.9% rise. On an annual basis, however, it rose by 3.4%, outpacing the forecasted increase of 3.3%.

The RBA implemented a 25 basis points (BPS) cut in interest rates, a move that was widely expected, lowering the official cash rate (OCR) to 3.6% from 3.85% earlier in August. RBA Governor Michele Bullock indicated that current forecasts suggest cash rates need to be lowered further for price stability. At the same time, Bullock has been hesitant to commit to future rate cuts, noting the board’s cautious, meeting-by-meeting approach given possible market volatility.

The downside potential for the AUD/USD pair could be limited, particularly as the US dollar weakens following the release of mixed consumer price index data from the US. Additionally, the AUD is receiving a boost as the Trump administration has delayed the implementation of extensive tariffs on China for another 90 days, just before the expiration of an agreement between the world’s two largest economies.

China, in turn, decided to hold off on imposing additional tariffs on US products during this same period, following Trump’s executive order to extend the tariff ceasefire. It’s worth noting that fluctuations in the Chinese economy can significantly affect the Australian dollar, especially considering their close trade relations.

U.S. Treasury Secretary Scott Bescent mentioned earlier that US and China trade officials are slated to meet again in the next two to three months to deliberate on the future of economic relations. Bescent pointed out that the US will need to observe consistent progress, particularly in curbing fentanyl trafficking from China, for potential tariff reductions to be considered.

Australian Dollar Grows as the US Dollar Weakens Amid Dovish Fed Sentiment

• The US Dollar Index (DXY) has shown evidence of a nearly 0.5% loss in the previous session, trading around 98.10 at the moment.
• The US Consumer Price Index (CPI) increased by 2.7% year-on-year in July, falling short of the expected 2.8% rise, consistent with the 2.7% seen in the previous month. The annual CORE CPI rose to 3.1%, surpassing the market consensus compared to June’s 2.9%.
• The CME FedWatch tool indicates a 94% market pricing for a Fed rate reduction at its upcoming September meeting.
• Federal Reserve Governor Michelle Bowman suggested that three interest rate cuts this year might be appropriate due to evident weakness in the labor market, which overshadows future inflation risks.
• San Francisco Federal Reserve President Mary Daly stated last week that despite some progress, evidence still requires addressing inflation pressures, hinting that the Fed might have to act quickly.
• Boston Federal Reserve President Susan Collins and Governor’s Committee member Lisa Cook warned of ongoing uncertainty, presenting a significant hurdle to effective policy communication and challenging the central bank’s interest rate management.
• According to the National China Statistics Bureau, China’s consumer price index (CPI) in July remained unchanged year-on-year, following a 0.1% increase in June, exceeding the negative market consensus. Conversely, the Producer Price Index (PPI) dropped 3.6% annually, compared to a previous decline of 3.3%.
• The RBA’s monetary policy statement acknowledged continued easing of inflation but expressed ongoing uncertainty. They reiterated that ensuring price stability and maintaining full employment are paramount.

Australian Dollar Moves Toward 9-Day EMA Support, Near 0.6500

The AUD/USD pair is trading around 0.6520 on Wednesday. Technical analysis indicates a generally bullish trend as the pair remains within a rising channel pattern. It’s also worth noting that it continues to stay above the nine-day exponential moving average (EMA), pointing to strengthened short-term momentum. The 14-day relative strength index (RSI) stands at the neutral 50 level, suggesting the market could be poised for a clear directional move.

On the flip side, the AUD/USD pair could aim for the upper boundary of the ascending channel at around 0.6580. If it manages to breach this level, it would bolster the bullish sentiment and could lead the pair to explore psychological thresholds around 0.6600 and a nine-month peak of 0.6625 reached on July 24.

Should the AUD/USD pair test immediate support with the nine-day EMA at 0.6511, the next point would be the 50-day EMA at 0.6501. A break below the lower boundary of the ascending channel, around 0.6490, may weaken short- to medium-term price momentum, putting downward pressure and potentially leading to two-month lows of 0.6419 recorded on August 1, followed by three-month lows of 0.6372 noted on June 23.

AUD/USD: Daily Charts

Australian Dollar Prices Today

The following table illustrates the change in the Australian Dollar (AUD) against major currencies today. It seems the AUD is holding strong against the US dollar.

The heatmap outlines the rate of change for major currencies against each other. The base currency is listed in the left column, while the estimated currency is on the top row. For instance, selecting AUD and moving across to USD indicates the change rate depicted in the corresponding box.