Australian Dollar Slides on Weak Jobs Data, Recovers Slightly After Hitting Three-Week Low
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Daily Currency Update
Last week (the week ending Friday, July 18, 2025), the Australian dollar underperformed, weakening notably against the U.S. dollar. It fell approximately 1.5% over the week, dragging to mid‑0.6400s and touching a three-week low near 0.6560 USD. By Friday it began recovering, briefly climbing back above the 0.6500 mark to close around 0.6503 USD. The chief driver was surprisingly weak labour data: the unemployment rate increased to 4.3% in June—the highest in almost five years—with only 2,000 jobs added instead of the expected 20,000. That triggered a bond‑market surge in expected RBA rate cuts and pushed the Aussie down roughly 0.9–1.0% on Thursday alone, hovering around 0.646–0.648 USD.Looking ahead this week, the Australian dollar is expected to remain under pressure as markets digest last week’s weaker-than-expected labour data, which increased expectations of a rate cut by the Reserve Bank of Australia (RBA) in August. With unemployment rising to 4.3%, traders are now pricing in nearly a 100% chance of a rate cut, putting downward pressure on the AUD. The key event this week will be the release of second-quarter CPI inflation data, which could either reinforce or challenge those expectations—strong inflation may delay policy easing, while soft data could accelerate it. Globally, sentiment around U.S. Federal Reserve policy and Chinese economic performance will also influence the Aussie’s direction. Technically, the AUD/USD is likely to trade between 0.6450 and 0.6600, with a break below 0.6450 possibly opening the door to further losses.
Key Movers
Last week, the U.S. dollar Index (DXY) gained ground, rising approximately 0.7%, with its value increasing from roughly 98.10 to 98.57 by Friday, July 18. The rise came amid stronger-than-expected U.S. economic data, including a rebound in June retail sales and a dip in unemployment claims, which reinforced expectations that the Federal Reserve will delay further rate cuts. Although the index briefly approached 99 midweek, it pulled back slightly to finish the week near 98.57, marking a second consecutive weekly gain. Technical levels played a role too: DXY broke above its 38.2% Fibonacci retracement at 98.20—a bullish signal—but remained capped around its 55-day moving average near 98.56.Looking ahead this week, the U.S. dollar is poised to remain firm as markets focus on further signs of economic resilience and the Federal Reserve’s policy trajectory. After its 0.7% gain last week and a strong recovery in July thanks to robust labor and inflation data, traders are tapering expectations for imminent rate cuts. Key upcoming events include U.S. retail sales, jobless claims, and Fed commentary, which could all reinforce the dollar’s upward momentum. Overall, unless fresh data or geopolitical shocks intervene, the dollar is likely to hold steady or strengthen slightly through this week.
Expected Ranges
- AUD/USD: 0.6400 - 0.6600 ▼
- AUD/EUR: 0.5500 - 0.5700 ▼
- GBP/AUD: 2.0500 - 2.0700 ▲
- AUD/NZD: 1.0800 - 1.1000 ▲
- AUD/CAD: 0.8800 - 0.9000 ▼