Aussie dollar trades slightly lower ahead of RBA rate decision
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Daily Currency Update
Over the past week, the Australian dollar (AUD) experienced a modest appreciation against the US dollar (USD), reflecting a broader trend of USD weakness driven by softer-than-expected US economic data and shifting expectations around Federal Reserve interest rate cuts. The AUD/USD exchange rate increased by approximately 1.09% over the week, closing at around 0.6427 on Friday, May 16. This rise was part of a broader trend where the AUD reached a weekly high of 0.6433 and a low of 0.6361, reflecting market volatility during the week. Key factors influencing this movement included weaker-than-expected US retail and producer price data, which bolstered expectations of Federal Reserve rate cuts. Additionally, reports of US-South Korea currency discussions and a general decline in US Treasury yields contributed to a softer USD, benefiting currencies like the AUD. Looking ahead, the Reserve Bank of Australia is expected to lower its official cash rate by 25 basis points to 3.85% at its upcoming meeting on Tuesday, May 20, which could further influence the AUD's performance against the USD. The AUD is currently trading at 0.6388 at time of writing.Key Movers
The US dollar has seen limited movement as markets digest the latest economic signals from the United States. U.S. consumer sentiment continued its downward trend in May 2025, reaching its lowest point since July 2022. The University of Michigan's preliminary Consumer Sentiment Index fell to 50.8 from 52.2 in April, marking the fifth consecutive monthly decline and the second-lowest reading on record. In April 2025, U.S. producer prices unexpectedly declined, marking the largest monthly drop in five years. The Producer Price Index (PPI) for final demand fell by 0.5%, following a flat reading in March. This decrease was primarily driven by a 0.7% drop-in service prices, which includes significant declines in hotel and motel rates, airline fares, and portfolio management fees. Prices for final demand goods remained unchanged during the month. Despite the recent easing in producer prices, some economists caution that ongoing trade tensions and elevated tariffs may still pose risks to future inflation and economic stability.Expected Ranges
- AUD/USD: 0.6300 - 0.6500 ▼
- AUD/EUR: 0.5600 - 0.5800 ▼
- GBP/AUD: 2.0550 - 2.0750 ▲
- AUD/NZD: 1.0700 - 1.0900 ▲
- AUD/CAD: 0.8800 - 0.9000 ▼