Australian dollar edges higher against US dollar as markets await RBA decision
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Daily Currency Update
The Australian dollar (AUD) inched higher against the US dollar (USD) on Monday, extending gains for a second consecutive day as the US dollar remains under pressure. The AUD/USD pair traded near the 0.6580 mark during the American session, reflecting an intraday gain of approximately 0.50%. The US dollar’s recent weakness is largely attributed to investor caution ahead of the looming US government funding deadline. Market participants are increasingly concerned about the risk of a potential government shutdown if lawmakers fail to reach an agreement by October 1. This uncertainty has weighed on the Greenback, allowing currencies like the Australian dollar to capitalize on the softer demand for USD. Looking ahead, attention now turns to the Reserve Bank of Australia’s (RBA) highly anticipated interest rate decision scheduled for Tuesday. The RBA is widely expected to hold its official cash rate steady at 3.60%, after having eased monetary policy by a cumulative 75 basis points so far in 2025. The central bank’s latest move will be closely scrutinized for clues on its outlook for the remainder of the year. Investors and analysts will particularly focus on the tone and wording of the accompanying monetary policy statement, which is expected to provide insights into the RBA’s future policy trajectory amid evolving economic conditions. A recent Reuters poll of 39 economists underscored the consensus view, with all respondents anticipating no change in the cash rate on Tuesday. Market forecasts for the next interest rate move vary among Australia’s major banks. ANZ, Commonwealth Bank, and Westpac are forecasting a rate cut in November, reflecting expectations of further easing in response to slowing economic growth and subdued inflation pressures. Conversely, the National Australia Bank (NAB) has taken a more cautious stance, ruling out any further rate cuts this year and projecting the next policy adjustment to occur as late as May 2026. As the week progresses, traders and investors will monitor both US fiscal developments and the RBA’s policy signals to gauge the outlook for AUD/USD and broader market sentiment.Key Movers
The US dollar weakened on Monday as investors grew increasingly cautious ahead of a critical funding deadline, with just days remaining before the government faces a potential shutdown on October 1. Heightened political uncertainty has intensified market volatility, as stakeholders await the outcome of last-minute negotiations aimed at averting a lapse in government funding. In a bid to resolve the impasse, US President Donald Trump convened a high-stakes meeting at the White House on Monday, bringing together political leaders for what was described as a final effort to strike a deal. The White House emphasized that the President is giving Democrats “one last chance to be reasonable” regarding the passage of a short-term continuing resolution to keep government operations funded. Meanwhile, House Minority Leader Hakeem Jeffries responded by signaling that Democrats remain open to compromise but drew a firm line against any cuts to essential healthcare programs. The debate underscores the broader ideological divide between parties, complicating efforts to secure bipartisan agreement. On the other side of the aisle, Republicans have insisted that the Senate must act swiftly on the stopgap funding bill already passed by the House of Representatives. With time running out, both parties face mounting pressure to reach a consensus and prevent the potentially damaging economic and political consequences of a government shutdown. The uncertainty surrounding these developments has contributed to broad US dollar softness in global markets, as investors weigh the risks associated with a shutdown against the backdrop of an already fragile economic environment.Expected Ranges
- AUD/USD: 0.6500 - 0.6700 ▲
- AUD/EUR: 0.5500 - 0.5700 ▲
- GBP/AUD: 2.0350 - 2.0550 ▼
- AUD/NZD: 1.1250 - 1.1450 ▲
- AUD/CAD: 0.9050 - 0.9250 ▼