- Australian Dollar receives support from easing RBA rate cut bets.
- Australia’s Westpac Consumer Confidence fell 3.1% to 95.4 in September from 98.5 in August.
- The US Dollar continues to lose ground amid rising Fed rate cut odds.
The Australian Dollar (AUD) gains ground against the US Dollar (USD) on Tuesday for the third successive session. The AUD/USD pair appreciates following Westpac Consumer Confidence, which declined 3.1% to 95.4 in September from 98.5 in August. The drop reflected renewed concern about the economic outlook. Focus shifts toward the US Nonfarm Payrolls Benchmark Revision due later in the day.
Matthew Hassan, Head of Australian Macro-Forecasting, noted that consumer recovery since mid-2024 has been sluggish, suggesting that additional policy easing may be required by the Reserve Bank of Australia (RBA). Hassan expects the central bank to lower rates by 25 basis points (bps) in November, followed by two further cuts in 2026.
The AUD, however, received support after last week’s solid July Trade Surplus and Q2 GDP figures, along with hotter July inflation, dampening expectations of additional Reserve Bank of Australia rate cuts. Swaps are now assigning nearly an 84% probability that the RBA will keep policy unchanged in September, while the likelihood of a 25-basis-point rate cut in November has eased to 80% from 100%.
Australian Dollar advances as US Dollar struggles amid rising odds of Fed rate cuts
- The US Dollar Index (DXY), which measures the value of the US Dollar against six major currencies, is facing challenges and trading around 97.40 at the time of writing. The Greenback struggles as traders ramp up their bets on an extra rate reduction by the US Federal Reserve (Fed) as the labor market continues to weaken.
- The CME FedWatch tool indicates a pricing in nearly 90% of a 25-basis-point (bps) rate cut by the Fed at the September policy meeting, up from 86% a week ago, with bets rising on a potential 50 bps reduction this month.
- Federal Reserve (Fed) Bank of Chicago President Austan Goolsbee said in an interview on Bloomberg TV on Friday that he is still unsure whether September is the right time for an interest rate cut, following weaker jobs data. He added that high inflation data is still cause for concern, and key Fed officials may not be fully sold on a September rate cut.
- The US Bureau of Labor Statistics (BLS) reported on Friday that the US Nonfarm Payrolls (NFP) rose by 22,000 in August, falling short of the market expectations of 75,000. This figure followed the 79,000 increase (revised from 73,000) recorded in July. Meanwhile, the Unemployment Rate increased to 4.3% in August, as expected, against the 4.2% prior. Average Hourly Earnings increased 0.3% MoM in August, in line with expectations.
- China’s Trade Balance rose to CNY 732.7 billion in August, up from CNY 705.18 billion previously. Exports rose 4.8% YoY in August vs. 8% in July. The country’s imports advanced 1.7% YoY in the same period vs. 4.8% recorded previously.
- Australia’s Trade Balance increased to 7,310 million month-over-month in July, from 5,366 million the prior month. The trade surplus widened against the expected decline to 4,920 million. Gross Domestic Product (GDP) rose by 0.6% quarter-over-quarter in Q2, following the 0.3% growth in Q1 and surpassing the expectations of 0.5% expansion. Meanwhile, the annual Q2 GDP grew by 1.8%, compared with the 1.4% growth in Q1, and was above the consensus of a 1.6% increase.
- Australia’s Monthly Consumer Price Index rose 2.8% year-over-year in July, beating both the previous 1.9% increase and the 2.3% forecast.
Australian Dollar rises to near 0.6600, ascending channel’s upper boundary
The AUD/USD pair is trading around 0.6590 on Tuesday. The technical analysis of the daily chart shows the pair moves upwards within the ascending channel pattern, suggesting the strengthening of a bullish bias. Additionally, the pair is positioned above the nine-day Exponential Moving Average (EMA), indicating short-term price momentum is stronger.
On the upside, the AUD/USD pair may target the upper boundary of the ascending channel at around 0.6620, followed by the 10-month high of 0.6625, which was recorded on July 24. A break above this crucial resistance zone would strengthen the bullish bias and support the pair to a move toward the 11-month high of 0.6687, recorded in November 2024.
The initial support lies at the nine-day EMA of 0.6551, aligned with the ascending channel’s lower boundary around 0.6540. A break below the channel would weaken the bullish bias and prompt the AUD/USD pair to test the 50-day EMA at 0.6511. Further declines would dampen the medium-term price momentum and open the doors for the pair to navigate the region around the three-month low of 0.6414, recorded on August 21.
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 Canadian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.04% | -0.14% | -0.18% | 0.04% | -0.21% | -0.09% | -0.07% | |
| EUR | 0.04% | -0.11% | -0.14% | 0.09% | -0.10% | -0.03% | -0.03% | |
| GBP | 0.14% | 0.11% | -0.06% | 0.19% | 0.00% | 0.07% | 0.07% | |
| JPY | 0.18% | 0.14% | 0.06% | 0.20% | 0.00% | 0.08% | 0.09% | |
| CAD | -0.04% | -0.09% | -0.19% | -0.20% | -0.22% | -0.10% | -0.11% | |
| AUD | 0.21% | 0.10% | -0.01% | -0.00% | 0.22% | 0.07% | 0.07% | |
| NZD | 0.09% | 0.03% | -0.07% | -0.08% | 0.10% | -0.07% | 0.02% | |
| CHF | 0.07% | 0.03% | -0.07% | -0.09% | 0.11% | -0.07% | -0.02% |
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.
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