- The Australian dollar remains stable, maintaining a 10% baseline tariff on Australian goods.
- China’s Caixin Manufacturing PMI dropped to 49.5 in July from 50.4 in June, falling short of the anticipated 50.3.
- Non-farm salaries in the US are expected to remain in a positive range.
On Friday, the Australian Dollar (AUD) hit a notable point, halting its six-day streak of gains. This was largely due to Australia avoiding the latest US tariff increases, with the AUD/USD pair showing stability as the 10% baseline tariff on Australian goods set by President Trump remains unchanged. Market participants are keeping an eye on the upcoming US Non-Farm Salary (NFP) report scheduled to be released later in the day.
Trade Minister Don Farrell mentioned on Friday that no other country benefits from such low mutual tariffs as Australia. He expressed optimism that this could enhance the competitiveness of Australian products in the US market, potentially boosting exports. “We will assist all exporters to seize this opportunity and increase their export volumes,” he stated.
The Australian Producer Price Index (PPI) saw a quarterly increase of 0.7% in Q2, which was below the anticipated 0.9% increase and prior readings. Year-on-year, the PPI climbed 3.4% to reach 3.7%. On a related note, China’s Caixin Manufacturing Purchasing Managers Index (PMI) slipped from 50.4 in June to 49.5 in July, which doesn’t meet market expectations of 50.3.
In an interview with CNBC’s “Squawk Box” on Thursday, US Treasury Secretary Scott Bescent shared his confidence in the possibility of the US and China approaching a significant tariff deadline that may lead to a trade agreement. “I think we have productive discussions,” he said, adding that some technical details on the Chinese side still need resolution but expressing optimism about reaching an agreement.
Despite Strong USD, the Australian Dollar Holds its Ground
- At the time of writing, the US Dollar Index (DXY) is trading around 100.00.
- President Trump signed an executive order on Thursday, introducing tariffs ranging from 10% to 41%, effective August 1. This includes imports from various countries, like Canada and India.
- Core US Personal Consumption Expense Price Index (PCE) inflation rose by 0.3% in June, as anticipated by many market players. Year-over-year, PCE inflation accelerated to 2.6%, which is higher than the expected 2.5% hold.
- The Federal Reserve, at its July meeting, chose to keep the benchmark federal funding rate in the 4.25%-4.5% range. Chairman Jerome Powell mentioned that no decision has been made regarding potential policy adjustments in September and that it may take some time to fully evaluate the tariffs’ effect on consumer prices.
- US national production (GDP) grew at an annual rate of 3.0% from April through June, exceeding the expected 2.4%. This comes on the heels of a 0.5% contraction in the first quarter.
- A new trade agreement with South Korea was announced by President Trump, imposing a 15% tariff on South Korean imports and committing $350 billion to US-managed investments from South Korea.
- The US and the European Union reached a trade framework agreement on Sunday, instituting a 15% tariff on most European goods, which will also take effect on August 1, ending a month-long deadlock.
- China’s Finance Minister Lang Foun stated that the country would enhance its financial support to bolster domestic consumption and combat economic challenges, suggesting a shift toward a more aggressive fiscal policy.
- In July, China’s NBS Manufacturing PMI dipped to 49.3 from 49.7 in June, falling below market forecasts. Meanwhile, the non-manufacturing PMI fell to 50.1, also below expectations.
- Retail sales in Australia increased by 1.2% in June, surpassing market expectations of 0.4% and previously revised numbers. The quarter-over-quarter figure showed a growth of 0.3% in Q2, compared to 0.1% in the first quarter.
- June experienced an 11.9% rise in Australia’s building permits, significantly exceeding market expectations of 2% and marking the strongest growth since May 2023.
- The quarterly Consumer Price Index (CPI) in Australia rose by 0.7% in Q2, falling short of the expected 0.9% and easing from the previous year’s inflation of 2.2% to 2.1%.
- In June, the monthly consumer price index increased by 1.9%, while the RBA-trimmed CPI for Q2 rose 0.6%, which was lower than the market estimate of 0.7% growth.
Australian Dollars Trade Under 0.6450 with Bearish Outlook
The AUD/USD is currently trading near 0.6430. Technical analysis suggests a bearish sentiment as the 14-day relative strength index (RSI) is below 50. Additionally, the pair is under the nine-day exponential moving average (EMA), hinting at waning short-term price momentum.
On the downside, the AUD/USD has found strong support at 0.6421 for the last two months, recorded on August 1. A drop below this could press the pair towards its three-month low of 0.6372, noted on June 23.
The pair aims for its first resistance at the nine-day EMA of 0.6487, followed by a 50-day EMA at 0.6495. If these levels are surpassed, both short- and medium-term positives could emerge, pushing towards the eight-month high of 0.6625.
AUD/USD: Daily Charts
Current Australian Dollar Prices
The following table indicates the rate of change for the Australian Dollar (AUD) against other major currencies. As of now, the Australian dollar is performing well against the New Zealand dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.11% | -0.03% | -0.12% | 0.07% | -0.02% | 0.43% | 0.11% | |
| EUR | 0.11% | 0.18% | 0.03% | 0.25% | 0.22% | 0.39% | 0.28% | |
| GBP | 0.03% | -0.18% | -0.14% | 0.07% | 0.04% | 0.43% | 0.11% | |
| JPY | 0.12% | -0.03% | 0.14% | 0.18% | 0.10% | 0.42% | 0.22% | |
| CAD | -0.07% | -0.25% | -0.07% | -0.18% | -0.12% | 0.35% | 0.04% | |
| AUD | 0.02% | -0.22% | -0.04% | -0.10% | 0.12% | 0.39% | 0.20% | |
| NZD | -0.43% | -0.39% | -0.43% | -0.42% | -0.35% | -0.39% | -0.20% | |
| CHF | -0.11% | -0.28% | -0.11% | -0.22% | -0.04% | -0.20% | 0.20% |
This heatmap shows the rate of change for major currencies against each other. The base currency is indicated in the left column, while the estimated currency appears in the top row. For instance, selecting Australian dollars against US dollars reveals the rate of change represented in the box.
