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- The Australian Dollar (AUD) is trading on a stronger note on Wednesday amid weakness in the US Dollar.
- Tight messages from the Reserve Bank of Australia and weaker-than-expected US retail sales data support the pair.
- US markets are closed on Juneteenth. US global Purchasing Managers’ Index (S&P) reports will be in the spotlight on Friday.
The Australian dollar (AUD) gained momentum on Wednesday, supported by a hawkish stance by the Reserve Bank of Australia (RBA) at its June meeting. Markets have fallen RBA Expectations of interest rate cuts and seeing the start of an easing cycle in 2025, which continues to strengthen the Australian dollar. Moreover, weaker than expected Retail This has prompted the US Federal Reserve to cut interest rates later this year, undermining the US currency across the board.
US markets will be closed on Wednesday in observance of National Independence Day, which falls on June 11th. Investors will focus on the Standard & Poor’s Global Manufacturing and Services PMI reports in the US at the end of the week. Any signs of expanding US business activity could lift the US dollar (USD) and limit the pair’s upside.
Daily Summary Market Drivers: The Australian dollar continues its gains on a hawkish Reserve Bank of Australia and weaker US data
- The Reserve Bank of Australia (RBA) kept its official interest rate steady at 4.35% for the fifth successive meeting at its June meeting. It is the longest suspension period since May 2022, when the interest rate hike cycle began.
- “The economic outlook remains uncertain and recent data has shown that the process of bringing inflation back to target is unlikely to be smooth,” the Reserve Bank of Australia’s board noted in a statement.
- A statement said that it will take some time before inflation sustainably reaches the target range, and recent data has reinforced the need to remain vigilant towards the upside risks to inflation.
- The Commerce Department reported Tuesday that U.S. retail sales rose 0.1% month-over-month in May after a 0.2% decline in April, beating estimates for a 0.2% increase.
- Boston Fed President Susan Collins said on Tuesday that there are possibilities for one or two rate cuts from the Fed later this year, but the central bank must be patient amid volatile readings on inflation, according to Reuters.
- Richmond Fed President Thomas Barkin said Tuesday that he needs to analyze several more months of economic data before considering a rate cut.
Technical Analysis: AUD/USD maintains a positive outlook amid the symmetrical triangle pattern
The Australian dollar is trading firmer during the day. the Australian Dollar/US Dollar The pair has formed a symmetrical triangle pattern since May 8. The uptrend prevails as the pair remains above the key 100-day Exponential Moving Average (EMA) on the daily chart. Schedule. The bullish momentum is supported by the 14-day RSI which is settling in the bullish territory near 54.0.
A decisive break above the upper border of the symmetrical triangle at 0.6670 would see a rally to 0.6700, the psychological level and May 17 high. An additional bullish filter to watch is 0.6760, the January 4th high.
On the downside, a crucial support level for the pair will appear near the confluence of the 100-day moving average and the lower limit of the triangle patterns at 0.6590-0.6600 areas. Any subsequent sell-offs will see it drop to 0.6510, the low of March 22, followed by 0.6465, the low of May 1.
The price of the Australian dollar in the last 7 days
The table below shows the percentage change of the Australian Dollar (AUD) against the major currencies listed in the last 7 days. The Australian dollar was the strongest against the Japanese yen.
| American dollar | euro | GBP | Bastard – scoundrel | Australian dollar | JPY | New Zealand dollar | Swiss franc | |
| American dollar | 0.03% | 0.25% | -0.27% | -0.89% | 0.44% | 0.15% | -1.55% | |
| euro | -0.03% | 0.24% | -0.29% | -0.92% | 0.41% | 0.12% | -1.58% | |
| GBP | -0.24% | -0.22% | -0.52% | -1.14% | 0.19% | -0.11% | -1.80% | |
| Bastard – scoundrel | 0.27% | 0.29% | 0.52% | -0.62% | 0.70% | 0.42% | -1.28% | |
| Australian dollar | 0.88% | 0.91% | 1.13% | 0.62% | 1.32% | 1.03% | -0.66% | |
| JPY | -0.44% | -0.42% | -0.19% | -0.71% | -1.33% | -0.28% | -2.00% | |
| New Zealand dollar | -0.15% | -0.11% | 0.11% | -0.41% | -1.04% | 0.30% | -1.69% | |
| Swiss franc | 1.52% | 1.54% | 1.77% | 1.26% | 0.64% | 1.95% | 1.67% |
The heat map shows the percentage changes in major currencies versus each other. The base currency is chosen from the left column, while the counter currency is chosen from the top row. For example, if you select the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent the EUR (base)/JPY (quote).
Frequently asked questions about the Australian dollar
One of the most important 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 major driver is the price of its largest export, iron ore. The health of the Chinese economy, its largest trading partner, is one factor, as well as Australia’s inflation, growth rate and trade. balance. Market sentiment – whether investors are snapping up riskier assets (risk on) or looking for safe havens (risk off) – is also a factor, with risk appetite positive for the Australian dollar.
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 affects the level of interest rates in the economy as a whole. The RBA’s main objective 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 Australian dollar, and relatively low interest rates. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former being AUD negative and the latter AUD positive.
China is Australia’s largest trading partner, so the health of the Chinese economy has a major impact on the value of the Australian Dollar (AUD). When the Chinese economy is performing well, it buys more raw materials, goods and services from Australia, which raises demand for the Australian dollar, raising its value. The opposite is the case when the Chinese economy does not grow as quickly as expected. Therefore, positive or negative surprises in Chinese growth data often have a direct impact on the Australian dollar and its crosses.
Iron ore is Australia’s largest export, representing $118 billion annually according to 2021 data, and China is its main destination. Therefore, the price of iron ore could be a driver of the Australian dollar. In general, if the price of iron ore rises, the Australian dollar also rises, as overall demand for the currency increases. The opposite is the case if the price of iron ore falls. Higher iron ore prices also tend to increase the likelihood of a positive trade balance for Australia, which is also positive for the Australian dollar.
The balance of trade, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can affect the value of the Australian dollar. If Australia produces highly sought-after exports, its currency will gain value from the excess demand generated by foreign buyers seeking to buy its exports in exchange for what it spends to buy imports. Therefore, a positive net trade balance strengthens the Australian dollar, with the opposite effect if the trade balance is negative.
