Home Daily Commentaries RBA rate cut looms: Aussie dollar poised for key decision

RBA rate cut looms: Aussie dollar poised for key decision

Brett Ottawa
Written by
Brett Ottawa

Brett Ottawa

OFXpert

Brett brings a wealth of experience, boasting more than 15 years in the foreign exchange market.

| Monday 7 July, 2025

Daily Currency Update

The Australian dollar (AUD) saw a mixed, but generally upward trend, against major currencies last week. It edged up approximately 0.34% against the US dollar (USD), fluctuating between US$0.6531 and US$0.6582. More notably, the AUD strengthened against the British pound (GBP) by about 0.84%, moving within a range of 0.4760 to 0.4822.

Domestically, the Australian Bureau of Statistics (ABS) released May 2025 retail sales data on July 2nd. Seasonally adjusted, retail turnover rose by a modest 0.2% for the month, following a flat April, and a 0.2% increase in March. This modest growth underscores a broader trend of subdued consumer spending, largely attributed to persistent cost-of-living pressures. Despite two prior interest rate cuts in 2025 and easing inflation, consumer confidence remains soft. Chris Rodwell, CEO of the Australian Retailers Association (ARA), highlighted the ongoing high business costs for retailers and advocated for further Reserve Bank of Australia (RBA) interest rate cuts to boost consumer sentiment.

Looking ahead, the market is keenly focused on the RBA Board meeting scheduled for July 7-8, with the decision due on July 8th at 2:30 PM AEST. The overwhelming consensus among market economists and Australia's "big four" banks (ANZ, CBA, NAB, Westpac) is for the RBA to cut the official cash rate by 25-basis points (0.25%), lowering it from the current 3.85% to 3.60%.

Key Movers

The US Dollar Index (DXY) experienced a challenging week from approximately June 30th to July 5th, 2025, continuing its downward trend. It closed around 96.98, dropping approximately 0.19% by July 4th and a more significant 0.29% over the week. This extends a notable decline, with some reports indicating a 2.5% fall throughout June, its sharpest first-half retreat since 1973. While the DXY had seen intraday fluctuations, including a high around 99.42 earlier in June, it was largely pushed lower by an "outside-weekly reversal." Towards the end of the week, the index attempted to "carve a local bottom," rebounding on July 3rd following the release of impressive US employment figures.

The Non-Farm Payrolls report for June 2025, released by the U.S. Bureau of Labor Statistics (BLS) on July 3rd, revealed that the economy added a robust 147,000 jobs. This figure significantly surpassed market expectations of around 110,000 jobs and followed an upwardly revised 144,000 jobs added in May. This surprisingly strong headline job creation suggested continued resilience in the US labour market. Initially, this data led to a strengthening of the US dollar and a reduction in market expectations for an immediate Federal Reserve rate cut (e.g. in July); as such strong employment numbers could lessen the urgency for the Fed to ease monetary policy rapidly.

Expected Ranges

  • AUD/USD: 0.6450 - 0.6650 ▲
  • AUD/EUR: 0.5450 - 0.5650 ▲
  • GBP/AUD: 2.0700 - 2.0900 ▼
  • AUD/NZD: 1.0700 - 1.0900 ▲
  • AUD/CAD: 0.8800 - 0.9000 ▲

Written by

Brett Ottawa

OFXpert

Brett brings a wealth of experience, boasting more than 15 years in the foreign exchange market. He started his foreign exchange career with OFX more than a decade ago, as a private dealer catering to individual clients. He later transitioned to the corporate sector, assuming the position of Corporate Senior Relationship Manager. What truly excites Brett is the opportunity to engage with people, supporting their business growth and sharing in their successes.