- The Australian Dollar gains ground as RBA Bullock warned that inflation risks persist.
- China’s Consumer Price Index rose 0.1% YoY, while the monthly CPI fell by 0.1% in June.
- President Trump may announce soon a 50% tariff on imported copper and a 200% tariff on pharmaceutical imports.
The Australian Dollar (AUD) appreciates against the US Dollar (USD) on Wednesday, extending its gains for the second successive session. The AUD/USD pair appreciated as the Reserve Bank of Australia (RBA) Governor Michele Bullock said in a post-meeting conference that inflation risks persist due to elevated unit labor costs and weak productivity, which could push inflation above forecasts.
RBA Governor Bullock also added that the full effects of previous rate cuts of 50 basis points have yet to be realized. She mentioned that more data and developments will be available by the next meeting. On Tuesday, Australia’s central bank left the Official Cash Rate (OCR) unchanged at 3.85%, against the highly anticipated 25 basis point rate cut in July.
In a survey poll by Reuters, all 30 economists forecast the Reserve Bank of Australia to cut the cash rate by 25 basis points to 3.60% in August. Australia’s four major banks, ANZ, CBA, NAB, and Westpac, also backed the rate cut call.
China’s Consumer Price Index climbed 0.1% year-over-year in June after declining 0.1% in May. The market consensus was 0% in the reported period. Meanwhile, the monthly CPI decreased by 0.1% against the expected 0% reading. Moreover, Producer Price Index (PPI) fell 3.6% YoY in June, following a 3.3% decline in May. The data came in lower than the market consensus of 3.2%.
RBA Deputy Governor Andrew Hauser stated early Wednesday that the global economy is facing an enormous amount of uncertainty. Hauser expressed surprise at how markets are shrugging and moving on. He also added that tariff effects on the global economy are profound and are likely to weigh on growth.
Australian Dollar advances despite firmer US Dollar amid ongoing tariff concerns
- The US Dollar Index (DXY), which measures the value of the US Dollar against six major currencies, remains steady after two days of gains and is trading at around 97.60 at the time of writing. Traders will likely observe the Federal Open Market Committee (FOMC) Minutes later in the North American session.
- US President Donald Trump said on Tuesday that he will announce a 50% tariff on imported copper and indicated that steeper sector-specific levies are forthcoming. Trump also said he would soon announce tariffs “at a very, very high rate, like 200%,” on pharmaceutical imports.
- US Treasury Secretary Scott Bessent said that the United States has already received around $100 billion in tariff revenue this year and could see that total surge to $300 billion by the end of 2025, driven by US President Donald Trump’s escalating trade measures.
- The White House announced late Monday that US President Donald Trump has signed an executive order delaying the implementation of new tariffs from July to August 1, per Bloomberg. Trump renewed his threat of a 25% tax on imports from Japan and South Korea and shared a batch of other letters to world leaders warning of levies from 1 August. Trump also imposed 25% rates on Malaysia, Kazakhstan, and Tunisia, while South Africa would see a 30% tariff, and Laos and Myanmar would face a 40% levy. Other nations hit with levies included Indonesia with a 32% rate, Bangladesh with 35%, and Thailand and Cambodia with duties of 36%.
- US President Donald Trump posted on social media on Monday that “Any Country aligning themselves with the Anti-American policies of BRICS, will be charged an ADDITIONAL 10% Tariff. There will be no exceptions to this policy.”
- The People’s Bank of China (PBoC) announced measures to further open its capital markets by supporting more onshore investors to invest in offshore bonds. China’s central bank is preparing to expand the Bond Connect program to include a wider range of domestic institutions, such as brokers, mutual funds, wealth managers, and insurers. This follows earlier reports that authorities are considering doubling the quota of the Southbound Bond Connect program to the equivalent of USD 139 billion. Any change in the Chinese economy could impact the AUD as China and Australia are close trading partners.
- The Financial Times reported that China is increasingly rerouting its exports through Southeast Asia to circumvent US tariffs imposed by the Trump administration. In May, direct shipments from China to the US fell by 43% in May, while China’s overall exports climbed by 4.8%. This shift was marked by a 15% surge in exports to Southeast Asia and a 12% increase to the European Union (EU). However, the US trade agreement with Vietnam now includes a 40% tariff on trans-shipped goods to curb such practices.
- Australian Treasurer Jim Chalmers said that the Reserve Bank of Australia’s decision to hold rates was neither the outcome millions of Australians had hoped for nor what markets had anticipated. Chalmers added that the central bank has signaled a clear direction on inflation and interest rates moving forward.
Australian Dollar targets nine-day EMA barrier after breaking above 0.6500
The AUD/USD pair is trading around 0.6530 on Wednesday. The daily chart’s technical analysis indicated a persistent bullish sentiment as the pair is positioned within the ascending channel pattern. The 14-day Relative Strength Index (RSI) remains slightly above the 50 mark, strengthening the bullish bias. However, the pair stays below the nine-day Exponential Moving Average (EMA), indicating that short-term price momentum is weaker.
The AUD/USD pair targets the primary barrier at the nine-day EMA of 0.6535. A successful break above this level could strengthen the short-term price momentum and support the pair to approach the eight-month high of 0.6590, recorded on July 1. Further advances would open the doors for the pair to explore the region around the upper boundary of the ascending channel around 0.6680.
On the downside, the AUD/USD pair may find its initial support at the ascending channel’s lower boundary around 0.6510, followed by the 50-day EMA at 0.6475. A break below this crucial support zone would dampen the medium-term price momentum and open the doors for the pair to test the two-month low at 0.6372.
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 strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.01% | -0.05% | 0.21% | 0.07% | -0.14% | -0.12% | -0.06% | |
| EUR | -0.01% | -0.05% | 0.19% | 0.06% | -0.11% | -0.14% | 0.04% | |
| GBP | 0.05% | 0.05% | 0.28% | 0.12% | -0.11% | -0.14% | 0.00% | |
| JPY | -0.21% | -0.19% | -0.28% | -0.17% | -0.35% | -0.35% | -0.27% | |
| CAD | -0.07% | -0.06% | -0.12% | 0.17% | -0.15% | -0.19% | -0.02% | |
| AUD | 0.14% | 0.11% | 0.11% | 0.35% | 0.15% | -0.02% | 0.16% | |
| NZD | 0.12% | 0.14% | 0.14% | 0.35% | 0.19% | 0.02% | 0.14% | |
| CHF | 0.06% | -0.04% | -0.00% | 0.27% | 0.02% | -0.16% | -0.14% |
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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