Australian Dollar Rises Amid Strong Inflation Data, Fueling Rate Hike Speculation
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Daily Currency Update
In the past 24 hours, the Australian dollar (AUD) experienced a slight rise of around 0.06% against the US dollar, trading near US$0.6514–US$0.6517. The movement was relatively muted as markets reacted to softer-than-expected inflation data from Australia, which increased speculation that the Reserve Bank of Australia (RBA) may cut interest rates soon. Despite the modest gain, the broader trend remains subdued, with the AUD down nearly 1% over the past month. Overall, the currency's performance reflects investor caution amid shifting expectations for both Australian and US monetary policy. Australia’s inflation data for the second quarter of 2025 came in softer than expected, with headline CPI rising just 0.7% quarter‑on‑quarter—below forecasts of 0.8%—and annual CPI easing to 2.1%, down from 2.4% in Q1 and reaching its lowest level since early 2021. The RBA’s preferred core measure, the trimmed mean, also decelerated to 2.7% year‑on‑year and rose only 0.6% over the quarter, marking a three‑year low and firmly within the bank’s 2–3% inflation target band. Indicators of easing price pressure included a sharp slowdown in housing inflation—just 0.7%—alongside weaker wage growth and rising unemployment, which reached 4.3%. These unexpectedly benign figures have heightened market expectations that the Reserve Bank of Australia will begin cutting interest rates as early as its August meeting. Today, support is anchored at US$0.6500, with a firm lower boundary at US$0.6450—a break below could open the path toward US$0.6380–US$0.6330 range. Incremental buffers include US$0.6540 and US$0.6550, which also act as short-term support zones in case of minor corrections. On the upside, resistance is found near US$0.6520–US$0.6530, with more significant hurdles at US$0.6550 and the broader ceiling around US$0.6620–US$0.6624 that must be decisively breached to shift bias bullish.Key Movers
Overnight, the US dollar (USD) experienced a modest decline against a basket of major currencies. The US Dollar Index (DXY) fell by approximately 0.19%, closing at 98.7416. This movement reflects a slight pullback following recent gains. While the Federal Reserve (Fed) maintained interest rates and indicated a cautious approach to future rate cuts, the market's reaction suggests a reassessment of the Fed's policy stance. Additionally, geopolitical developments, such as the imposition of new tariffs on countries including India and Brazil, have introduced uncertainties that may influence investor sentiment and, consequently, the demand for the US dollar as a safe-haven asset. Overall, the US dollar's performance overnight indicates a period of consolidation, with investors awaiting further economic data and policy signals to determine the currency's next directional move. US stock markets experienced mixed performances amid economic data and Federal Reserve policy decisions. The S&P 500 declined by 0.1% to close at 6,362.90, while the Dow Jones Industrial Average fell 0.4% to 44,461.28. Conversely, the Nasdaq Composite edged up 0.1% to 21,129.67. Additionally, the US economy grew at a stronger-than-expected 3% annualised rate in Q2 2025, primarily due to trade distortions from recent tariff policies. However, underlying growth was weaker, estimated closer to 0.5%, raising concerns about the sustainability of economic expansion. Overall, the mixed market performance reflects investor caution amid economic uncertainties and Federal Reserve policy decisions.Expected Ranges
- AUD/USD: 0.6350 - 0.6550 ▼
- AUD/EUR: 0.5550 - 0.5750 ▼
- GBP/AUD: 2.0450 - 2.0650 ▲
- AUD/NZD: 1.0800 - 1.1000 ▲
- AUD/CAD: 0.8800 - 0.9000 ▼