- The Australian Dollar holds losses after People’s Bank of China cut its one-year Loan Prime Rate to 3.00% from 3.10%.
- The Reserve Bank of Australia is expected to cut interest rates by 25 basis points on Tuesday.
- The US Dollar weakened following Moody’s downgrade of the US credit rating from Aaa to Aa1.
The Australian Dollar (AUD) dips against the US Dollar (USD) on Tuesday, following a gain of over 0.50% in the previous session. The AUD/USD pair remains under pressure after the People’s Bank of China (PBoC) announced its Interest Rate Decision. The PBoC announced a reduction in its Loan Prime Rates (LPRs) on Tuesday. The one-year LPR was lowered from 3.10% to 3.00%, while the five-year LPR was reduced from 3.60% to 3.50%. Given the close trade relationship between Australia and China, any change in the Chinese markets can significantly impact the Aussie Dollar.
The Australian Dollar continues to weaken due to escalating political turmoil in Australia. The opposition coalition fractured after the National Party withdrew from its alliance with the Liberal Party. Meanwhile, the ruling Labor Party returned to power with a stronger and broader mandate, capitalizing on the disarray within the Opposition.
Market attention now turns to the Reserve Bank of Australia’s (RBA) upcoming rate decision scheduled for later in the day. The central bank is expected to cut interest rates by 25 basis points, following last week’s stronger-than-anticipated employment data.
The AUD/USD pair strengthened on Monday as the US Dollar weakened in the wake of Moody’s Ratings downgrading the US credit rating from Aaa to Aa1. This move aligns with similar downgrades by Fitch Ratings in 2023 and Standard & Poor’s in 2011. Moody’s now projects US federal debt to climb to around 134% of GDP by 2035, up from 98% in 2023, with the budget deficit expected to widen to nearly 9% of GDP. This deterioration is attributed to rising debt-servicing costs, expanding entitlement programs, and falling tax revenues.
In addition, the risk-sensitive Australian Dollar gained support from renewed optimism surrounding a 90-day US-China trade truce and hopes for further trade deals with other countries. Meanwhile, US Treasury Secretary Scott Bessent told CNN on Sunday that President Donald Trump intends to implement tariffs at previously threatened levels on trading partners that do not engage in negotiations “in good faith.”
Australian Dollar depreciates despite a weaker US Dollar amid a dovish Fed
- The US Dollar Index (DXY), which tracks the US Dollar (USD) against a basket of six major currencies, is remaining subdued and trading lower at around 100.40 at the time of writing.
- Economic data released last week pointed to easing inflation, as both the Consumer Price Index (CPI) and Producer Price Index (PPI) signaled a deceleration in price pressures. This has heightened expectations that the Federal Reserve may implement additional rate cuts in 2025, contributing to further weakness in the US Dollar. Additionally, disappointing US Retail Sales figures have deepened concerns over an extended period of sluggish economic growth.
- US President Donald Trump told Fox News that he is working to gain greater access to China, describing the relationship as excellent and expressing willingness to negotiate directly with President Xi on a potential deal.
- Trump administration plans to add several Chinese chipmakers to its export blacklist, known as the “entity list.” According to the Financial Times, Trump administration officials expressed concern late Thursday that imposing export controls on key Chinese firms at this stage could undermine the recently reached trade agreement between China and the US during talks in Geneva over the weekend.
- The National Bureau of Statistics (NBS) reported on Monday that China’s Retail Sales rose by 5.1% year-over-year (YoY) in April, falling short of the 5.5% forecast and down from 5.9% in March. Industrial Production grew by 6.1% YoY during the same period, beating the expected 5.5% but slowing from the previous 7.7% growth.
- According to the Australian Bureau of Statistics (ABS), employment surged by 89,000 in April, significantly higher than the 36,400 increase in March and far above the forecasted 20,000. Meanwhile, the Unemployment Rate remained unchanged at 4.1%.
- Australia’s seasonally adjusted Wage Price Index rose by 3.4% year-over-year in Q1 2025, up from a 3.2% increase in Q1 2024 and surpassing market forecasts of a 3.2% gain. This marks a recovery from the prior quarter, which recorded the slowest wage growth since Q3 2022. On a quarterly basis, the index climbed 0.9% in Q1, surpassing the projected 0.8% rise.
Australian Dollar hovers around 0.6450, support appears at nine-day EMA
AUD/USD is trading near 0.6450 on Tuesday, with technical indicators on the daily chart pointing to a bullish bias. The pair remains above the nine-day Exponential Moving Average (EMA), while the 14-day Relative Strength Index (RSI) holds above the 50 mark, suggesting continued upward momentum.
On the upside, immediate resistance is located at the six-month high of 0.6515, posted on December 2, 2024. A sustained break above this level could open the door to the seven-month high of 0.6687 from November 2024.
Support is initially seen at the nine-day EMA of 0.6429, followed by the 50-day EMA around 0.6363. A clear drop below these levels would likely weaken the short- to medium-term outlook, potentially triggering a deeper decline toward the March 2020 low of 0.5914.
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 Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.05% | 0.02% | 0.03% | 0.10% | 0.24% | 0.18% | -0.03% | |
| EUR | -0.05% | -0.02% | -0.02% | 0.06% | 0.20% | 0.14% | -0.08% | |
| GBP | -0.02% | 0.02% | 0.02% | 0.08% | 0.19% | 0.18% | -0.02% | |
| JPY | -0.03% | 0.02% | -0.02% | 0.06% | 0.19% | 0.13% | -0.02% | |
| CAD | -0.10% | -0.06% | -0.08% | -0.06% | 0.13% | 0.07% | -0.10% | |
| AUD | -0.24% | -0.20% | -0.19% | -0.19% | -0.13% | -0.06% | -0.24% | |
| NZD | -0.18% | -0.14% | -0.18% | -0.13% | -0.07% | 0.06% | -0.18% | |
| CHF | 0.03% | 0.08% | 0.02% | 0.02% | 0.10% | 0.24% | 0.18% |
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.
