- The Australian Dollar strengthens amid rising expectations of the Reserve Bank of Australia keeping interest rates unchanged in April.
- The AUD could encounter headwinds as traders adopt a cautious stance ahead of Trump’s anticipated tariff announcement on April 2.
- The US Dollar gained ground as S&P Global US Services PMI surged to 54.3 in March, a three-month high.
The Australian Dollar (AUD) extends its gains for the second successive session on Tuesday. However, the AUD/USD pair faced downward pressure amid a strengthening US Dollar (USD). Robust S&P Global Services PMI data and cautious Fedspeak likely fueled the Greenback’s gains.
The AUD finds support as investors anticipate the Reserve Bank of Australia (RBA) keeping interest rates unchanged in April, following its first rate cut in four years in February. Additionally, expectations of Chinese stimulus continue to bolster the Australian economy, given the strong trade ties between the two nations.
Still, the risk-sensitive AUD/USD pair could face potential headwinds as traders remain cautious amid uncertainty over US President Donald Trump’s tariff announcement scheduled for April 2. While Trump hinted that “a lot” of countries could receive exemptions, the details of his administration’s tariff plans remain unclear.
Australian Dollar appreciates despite a stable US Dollar
- The US Dollar Index (DXY), which tracks the USD against six major currencies, remains stable and is trading around 104.30. The Greenback received support after the release of mixed S&P Global US PMI data on Monday.
- The S&P Global US Composite PMI climbed to 53.5 in March, up from February’s 10-month low of 51.6, signaling the strongest growth since December 2024. The expansion was driven by the service sector, which saw a rebound in business activity.
- The S&P Global US Services PMI surged to 54.3 in March, a three-month high, from 51.0 in February, exceeding market expectations of 50.8. Service sector output rebounded sharply after hitting a 15-month low in February. Meanwhile, the Manufacturing PMI dropped to 49.8 from 52.7, falling short of market expectations of 51.8. This decline followed February’s strongest manufacturing output increase in nearly three years.
- Atlanta Fed President Raphael Bostic emphasized ongoing uncertainty, stating that inflation progress may be slower than previously projected. Bostic trimmed his 2025 rate cut expectations, citing persistent price pressure and trade-related risks.
- The US Dollar came under pressure as concerns grew over a potential US economic slowdown, fueled by trade policies under President Trump. However, this downward trend was offset by hawkish remarks from Fed Chair Jerome Powell last week. He stated, “Labor market conditions are solid, and inflation has moved closer to our 2% longer-run goal, though it remains somewhat elevated.”
- President Trump suggested there could be room for “talk” on trade issues with China and expressed hope for a meeting with Chinese President Xi Jinping in the near future. Earlier this month, his proposal to strengthen US shipbuilding by imposing steep fees on China-linked vessels entering American ports led to a buildup of US coal inventories and heightened uncertainty in the already struggling agriculture sector.
- Judo Bank reported on Monday that Australia’s Manufacturing PMI climbed to 52.6 in March from 50.4 in February, while the Services PMI improved to 51.2 from 50.8. The Composite PMI also increased, reaching 51.3 in March compared to 50.6 previously.
- China’s ruling Communist Party (CCP) central committee and State Council have suggested ambitious plans to “vigorously boost consumption” by raising wages and easing financial burdens. This latest initiative aims to restore consumer confidence and revitalize the country’s struggling economy.
- Reserve Bank of Australia (RBA) Assistant Governor (Economic) Sarah Hunter reiterated last week the central bank’s cautious stance on rate cuts. The RBA’s February statement signaled a more conservative approach than market expectations, with a strong focus on monitoring US policy decisions and their potential impact on Australia’s inflation outlook.
Australian Dollar remains below 0.6300 resistance near nine-day EMA
AUD/USD is trading near 0.6290 on Tuesday, with technical indicators signaling a bearish bias as the pair remains within a descending channel. The 14-day Relative Strength Index (RSI) sits just below 50, reinforcing the persistent downward momentum.
Key support lies at the lower boundary of the descending channel around 0.6220. A break below this level could deepen the bearish outlook, potentially driving the pair toward its seven-week low of 0.6187, recorded on March 5.
On the upside, initial resistance is at the nine-day Exponential Moving Average (EMA) of 0.6308, closely followed by the 50-day EMA at 0.6310. A breakout above these levels could strengthen short- and medium-term bullish momentum, with the pair potentially testing the upper boundary of the descending channel at 0.6320.
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 US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.04% | 0.00% | 0.00% | -0.03% | -0.15% | 0.01% | 0.00% | |
| EUR | 0.04% | 0.03% | 0.00% | -0.00% | -0.09% | 0.04% | 0.04% | |
| GBP | -0.00% | -0.03% | -0.04% | -0.03% | -0.12% | 0.01% | -0.04% | |
| JPY | 0.00% | 0.00% | 0.04% | -0.02% | -0.10% | 0.02% | 0.00% | |
| CAD | 0.03% | 0.00% | 0.03% | 0.02% | -0.08% | 0.04% | -0.00% | |
| AUD | 0.15% | 0.09% | 0.12% | 0.10% | 0.08% | 0.13% | 0.12% | |
| NZD | -0.01% | -0.04% | -0.01% | -0.02% | -0.04% | -0.13% | -0.04% | |
| CHF | -0.01% | -0.04% | 0.04% | -0.01% | 0.00% | -0.12% | 0.04% |
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).
RBA FAQs
The Reserve Bank of Australia (RBA) sets interest rates and manages monetary policy for Australia. Decisions are made by a board of governors at 11 meetings a year and ad hoc emergency meetings as required. The RBA’s primary mandate is to maintain price stability, which means an inflation rate of 2-3%, but also “..to contribute to the stability of the currency, full employment, and the economic prosperity and welfare of the Australian people.” Its main tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will strengthen the Australian Dollar (AUD) and vice versa. Other RBA tools include quantitative easing and tightening.
While inflation had always traditionally been thought of as a negative factor for currencies since it lowers the value of money in general, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Moderately higher inflation now tends to lead central banks to put up their interest rates, which in turn has the effect of attracting more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in the case of Australia is the Aussie Dollar.
Macroeconomic data gauges the health of an economy and can have an impact on the value of its currency. Investors prefer to invest their capital in economies that are safe and growing rather than precarious and shrinking. Greater capital inflows increase the aggregate demand and value of the domestic currency. Classic indicators, such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can influence AUD. A strong economy may encourage the Reserve Bank of Australia to put up interest rates, also supporting AUD.
Quantitative Easing (QE) is a tool used in extreme situations when lowering interest rates is not enough to restore the flow of credit in the economy. QE is the process by which the Reserve Bank of Australia (RBA) prints Australian Dollars (AUD) for the purpose of buying assets – usually government or corporate bonds – from financial institutions, thereby providing them with much-needed liquidity. QE usually results in a weaker AUD.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the Reserve Bank of Australia (RBA) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the RBA stops buying more assets, and stops reinvesting the principal maturing on the bonds it already holds. It would be positive (or bullish) for the Australian Dollar.
