Australian Dollar continues to fall after retreating from eight-month highs
- The Australian Dollar pulled back from an eight-month high of 0.6625 reached on Thursday.
- Traders watch for US Treasury Secretary Scott Bessent’s upcoming meeting with Chinese officials in Stockholm next week.
- RBA’s Bullock highlighted her commitment to keep inflation low and stable moving forward.
The Australian Dollar (AUD) declines against the US Dollar (USD) on Friday, extending its losses for the second consecutive day. The AUD/USD pair continues to lose ground after pulling back from an eight-month high of 0.6625, which was reached on Thursday.
Traders monitor developments in the United States (US) trade talks with key partners, including China, Australia’s largest trading partner. US Treasury Secretary Scott Bessent announced earlier this week that American and Chinese officials will meet in Stockholm next week for a third round of high-level talks.
Reserve Bank of Australia (RBA) Governor Michele Bullock, speaking at the Anika Foundation event in Sydney, emphasized her commitment to ensuring that inflation stays low and stable moving forward. Bullock also noted ongoing uncertainty in the global economy.
Australian Dollar loses ground as US Dollar advances ahead of manufacturing data
- The US Dollar Index (DXY), which measures the value of the US Dollar against six major currencies, is extending its gains for the second successive session and trading around 97.60 at the time of writing. US Durable Goods Orders for June will be eyed later in the day.
- US Treasury Secretary Scott Bessent said late Thursday that a nominee for the next Federal Reserve Chair is likely to be announced in December or January. Bessent emphasized that there is “no rush” to select a successor to current Fed Chair Jerome Powell, noting that the nominee could come from current board members or the heads of the district banks, according to Bloomberg.
- The Financial Times reported on Wednesday that the European Union (EU) and the United States (US) are closing in on a deal that would impose 15% tariffs on EU goods imported into the US.
- President Trump announced a trade deal with Japan that includes a 15% tariff on Japanese exports to the US. As part of the agreement, Japan will invest $550 billion in the US and open its markets to key American products.
- President Trump said during a meeting with the Philippine President Bongbong Marcos on Tuesday that “I think we will get a trade deal; we're close to a trade deal.” I don't mind if the Philippines gets along with China, he added.
- Fed Governor Adriana Kugler said that the US central bank should not lower interest rates "for some time" since the effects of the Trump administration's tariffs are starting to show up in consumer prices. Kugler added that restrictive monetary policy is essential to keep inflationary psychology in line.
- San Francisco Fed President Mary Daly said last week that expecting two rate cuts this year is a "reasonable" outlook, while warning against waiting too long. Daly added that rates would eventually settle at 3% or higher, exceeding the pre-pandemic neutral rate.
- Fed Governor Christopher Waller believes that the US central bank should reduce its interest rate target at the July meeting, citing mounting economic risks. Waller added that delaying cuts runs the risk of needing more aggressive action later.
- Judo Bank and S&P Global showed that Australia’s Composite PMI rose to 53.6 in July, versus 51.6 prior, reaching the highest level since April 2022 and marking the tenth consecutive month of expansion. Services PMI climbed to 53.8 in July from the previous reading of 51.8, reaching its fastest pace in 16 months. Meanwhile, the Manufacturing PMI came in at 51.6 in July versus 50.6 prior. New orders for manufactured goods rebounded, driving the strongest overall growth in new business in more than three years.
- The latest Reserve Bank of Australia (RBA) Meeting Minutes indicated that the board agreed further rate cuts were warranted over time, with attention centered on the timing and extent of easing. The majority believed it was best to await confirmation of an inflation slowdown before easing. Most members felt cutting rates three times in four meetings would not be "cautious and gradual.”
- Westpac reports that its Leading Index continues to reflect weakening momentum. The six-month annualised growth rate in the Westpac-Melbourne Institute Leading Index eased to 0.03% in June, down from 0.11% in May. The slowdown is primarily driven by softer commodity prices, waning sentiment, and reduced hours worked.
Australian Dollar falls below 0.6600 toward nine-day EMA support
AUD/USD is trading around 0.6590 on Friday. The daily chart’s technical analysis suggests a persistent bullish bias as the pair moves upwards within the ascending channel pattern. The 14-day Relative Strength Index (RSI) is positioned above the 50 mark, suggesting a bullish bias is active. Additionally, the pair remains above the nine-day Exponential Moving Average (EMA), indicating that short-term price momentum is still intact.
The AUD/USD pair may target the initial barrier at the psychological level of 0.6650, followed by the ascending channel’s upper boundary around 0.6680.
On the downside, the AUD/USD pair could find its primary support at the nine-day EMA at 0.6561. A break below this level could weaken the short-term price momentum and prompt the pair to test the 50-day EMA of 0.6506, followed by the ascending channel’s lower boundary around 0.6480.
AUD/USD: Daily Chart
Australian Dollar PRICE Today
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the weakest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.05% | 0.11% | 0.25% | 0.10% | 0.17% | 0.04% | 0.16% | |
| EUR | -0.05% | 0.09% | 0.19% | 0.07% | 0.03% | -0.01% | 0.09% | |
| GBP | -0.11% | -0.09% | 0.14% | -0.04% | -0.06% | -0.08% | 0.00% | |
| JPY | -0.25% | -0.19% | -0.14% | -0.17% | -0.15% | -0.21% | -0.11% | |
| CAD | -0.10% | -0.07% | 0.04% | 0.17% | 0.12% | -0.05% | 0.02% | |
| AUD | -0.17% | -0.03% | 0.06% | 0.15% | -0.12% | -0.04% | 0.09% | |
| NZD | -0.04% | 0.00% | 0.08% | 0.21% | 0.05% | 0.04% | 0.10% | |
| CHF | -0.16% | -0.09% | -0.01% | 0.11% | -0.02% | -0.09% | -0.10% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).
Australian Dollar FAQs
One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.
The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.
China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.
Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
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