All eyes on RBA: Australian Dollar braces for potential policy shift
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Daily Currency Update
During the week ending August 10, 2025, the Australian dollar (AUD) exhibited a modest yet steady appreciation against the US dollar (USD). The currency began the week trading in a relatively stable range between 0.6469 and 0.6477 USD, reflecting cautious market sentiment in the early sessions. However, as the week unfolded, several positive developments contributed to a gradual strengthening of the Aussie dollar. A primary catalyst was the release of stronger-than-expected trade balance data from Australia, which revealed that the nation continued to maintain a healthy trade surplus. This bolstered investor confidence in Australia’s broader economic outlook, reinforcing the AUD’s appeal.Simultaneously, global markets started pricing in an increased likelihood that the US Federal Reserve might ease interest rates sooner than anticipated, driven by emerging signs of slowing economic activity in the United States. This expectation weighed on the US dollar, which softened modestly across the board, creating a more favorable environment for the AUD to gain ground. By midweek, the Australian dollar successfully breached the psychologically significant 0.6500 USD threshold and continued a measured upward trajectory. The week culminated with the AUD closing at approximately 0.6524 USD on Friday, August 9, representing a solid weekly gain.
Overall, the Australian dollar’s performance last week was underpinned by a blend of resilient domestic economic indicators and shifting international monetary policy expectations that collectively dampened demand for the US dollar. Looking ahead to the coming week, the Australian dollar is expected to encounter modest downward pressure against the USD. This outlook is largely shaped by market anticipation of a 25-basis-point rate cut from the Reserve Bank of Australia (RBA) scheduled for August 12, a move generally viewed as bearish for the currency. While the AUD’s brief advance above 0.6500 USD provided some technical optimism, prevailing sentiment favors a mild depreciation unless domestic economic data surpass expectations or international dynamics shift unexpectedly in Australia’s favor. Traders will be closely monitoring the RBA’s policy announcement and any accompanying guidance for cues on the currency’s near-term direction.
Key Movers
The US Dollar Index (DXY), which measures the dollar’s strength against a basket of major currencies, showed mixed performance during the week ending August 10, 2025. After starting the week relatively steady, the index experienced some fluctuations driven by changing market expectations around Federal Reserve policy. Early in the week, speculation about a possible rate cut later this year put mild downward pressure on the dollar, causing the index to dip slightly. However, midweek data—such as stronger-than-expected US jobless claims—helped support the dollar, resulting in a partial rebound of the index. By the end of the week, the DXY closed relatively flat to slightly lower compared to the previous week, reflecting ongoing uncertainty about the pace and timing of future US monetary easing. Overall, the index portrayed a cautious market sentiment with the dollar holding firm but under pressure amid mixed economic signals.Last week, US stocks experienced a generally positive performance, with major indices showing modest gains amid mixed economic data and evolving investor sentiment. The S&P 500 and Nasdaq Composite both edged higher, supported by strong corporate earnings reports and optimism around potential Federal Reserve rate cuts later this year. However, the gains were somewhat tempered by concerns over slowing global economic growth and lingering inflationary pressures. Tech and consumer discretionary sectors led the rally, while more cyclical industries showed cautious trading. Overall, despite some volatility midweek, the stock market maintained a cautiously optimistic tone, reflecting a balance between hope for accommodative monetary policy and uncertainty about the broader economic outlook.
Expected Ranges
- AUD/USD: 0.6400 - 0.6600 ▲
- AUD/EUR: 0.5500 - 0.5700 ▲
- GBP/AUD: 2.0450 - 2.0650 ▼
- AUD/NZD: 1.0800 - 1.1000 ▲
- AUD/CAD: 0.8850 - 0.9050 ▼