- The Australian Dollar remains steady as traders exercise caution ahead of the Federal Reserve’s interest rate decision.
- Australia’s Treasurer Jim Chalmers criticized the Trump administration’s trade policies, calling them “self-defeating and self-sabotaging.”
- The Fed is expected to keep interest rates unchanged on Wednesday, citing persistent inflation concerns and ongoing economic uncertainty.
The Australian Dollar (AUD) remains steady on Wednesday after experiencing losses in the previous session. The AUD/USD pair holds its ground as the US Dollar (USD) stays firm, supported by stable US yields ahead of the Federal Reserve’s (Fed) interest rate decision later in the day. No changes in rates are expected amid persistent inflation concerns and heightened economic uncertainty.
Australia’s Westpac Leading Index rose to 0.8% in February, up from 0.6% in January, reflecting continued domestic resilience despite fading currency and commodity tailwinds. The impact of tariff shocks is beginning to surface, but domestically driven factors are providing solid support.
Treasurer Jim Chalmers addressed trade tensions in a speech on Tuesday, rejecting a “race to the bottom” on tariffs. Chalmers criticized the Trump administration’s trade policies as “self-defeating and self-sabotaging,” emphasizing Australia’s need to focus on economic resilience rather than retaliation. He also condemned the US decision to exclude Australia from steel and aluminum tariff exemptions, calling it “disappointing, unnecessary, senseless, and wrong.”
On Monday, Reserve Bank of Australia (RBA) Assistant Governor (Economic) Sarah Hunter reiterated 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 stable as traders adopt caution ahead of Fed policy decision
- The US Dollar Index (DXY), which tracks the USD against six major currencies, is trading positively near 103.40 at the time of writing. However, the Greenback faces headwinds as weak US economic data and renewed tariff threats from President Donald Trump add to investor uncertainty.
- Market participants are closely watching the Federal Reserve’s updated economic projections for insights into the future path of US interest rates. Any hawkish signals from Fed policymakers could provide support for the USD against its peers.
- The US Census Bureau reported on Monday that Retail Sales increased by 0.2% month-over-month in February, falling short of the market expectation of 0.7%. This followed a revised decline of -1.2% in January (previously reported as -0.9%). On a yearly basis, Retail Sales grew by 3.1%, down from the revised 3.9% in January (previously 4.2%).
- On Tuesday, US President Donald Trump and Russian President Vladimir Putin agreed to an immediate pause in strikes targeting energy infrastructure in the Ukraine war. In a Truth Social post following his call with Putin, Trump stated that both sides had committed to a 30-day halt on attacks against each other’s energy infrastructure, mirroring statements from the Kremlin.
- However, Putin declined to endorse a broader month-long ceasefire negotiated by Trump’s team with Ukrainian officials in Saudi Arabia, signaling continued tensions despite the temporary agreement on energy targets.
- US President Donald Trump reaffirmed plans to impose reciprocal and sectoral tariffs on April 2. Trump confirmed that there would be no exemptions for steel and aluminum and mentioned that reciprocal tariffs on specific countries would be implemented alongside auto duties.
- Australian Prime Minister Anthony Albanese confirmed that Australia will not impose reciprocal tariffs on the US, emphasizing that retaliatory measures would only raise costs for Australian consumers and fuel inflation.
- China introduced a special action plan over the weekend aimed at boosting consumption and improving market sentiment across the region. The plan includes measures to raise wages, encourage household spending, and stabilize stock and real estate markets. Any positive developments related to the Chinese stimulus plan could further support the AUD, given China’s role as a key trading partner for Australia.
- China’s retail sales grew by 4.0% year-over-year in January-February, improving from December’s 3.7% increase. Meanwhile, industrial production rose 5.9% YoY during the same period, exceeding the 5.3% forecast but slightly lower than the previous reading of 6.2%.
Australian Dollar finds resistance at 0.6400 near three-month highs
The AUD/USD pair is trading around 0.6360 on Wednesday, maintaining its bullish trajectory as it continues to climb within the ascending channel on the daily chart. The 14-day Relative Strength Index (RSI) remains above 50, reinforcing the positive momentum.
On the upside, the AUD/USD pair may attempt to retest its three-month high of 0.6408, last reached on February 21. A breakout above this level could strengthen the bullish bias, potentially driving the pair toward the upper boundary of the ascending channel near 0.6490.
Key support lies at the nine-day Exponential Moving Average (EMA) of 0.6334, aligned with the lower boundary of the ascending channel. Further support is seen at the 50-day EMA at 0.6311. A decisive break below this critical zone could weaken the bullish outlook, exposing the AUD/USD pair to further downside pressure toward the six-week low of 0.6187, recorded on March 5.
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 | 0.09% | 0.05% | 0.19% | 0.02% | -0.01% | 0.08% | 0.05% | |
| EUR | -0.09% | -0.04% | 0.13% | -0.08% | -0.08% | -0.00% | -0.03% | |
| GBP | -0.05% | 0.04% | 0.16% | -0.03% | -0.04% | 0.04% | -0.01% | |
| JPY | -0.19% | -0.13% | -0.16% | -0.18% | -0.19% | -0.13% | -0.15% | |
| CAD | -0.02% | 0.08% | 0.03% | 0.18% | 0.00% | 0.09% | 0.03% | |
| AUD | 0.00% | 0.08% | 0.04% | 0.19% | -0.00% | 0.08% | 0.08% | |
| NZD | -0.08% | 0.00% | -0.04% | 0.13% | -0.09% | -0.08% | -0.04% | |
| CHF | -0.05% | 0.03% | 0.00% | 0.15% | -0.03% | -0.08% | 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).
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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