Australian Dollar remains weaker as US Dollar strengthens ahead of ADP Employment Change

  • The Australian Dollar fell after Retail Sales came in at a 0.2% rise MoM in May, against the expected 0.4% increase.
  • The AUD may regain its ground due to improved market sentiment.
  • Fed’s Powell highlighted the importance of gauging more data before initiating monetary policy easing.

The Australian Dollar (AUD) edges lower against the US Dollar (USD) on Wednesday following the release of weaker-than-expected domestic economic data. However, the AUD/USD pair gained ground as the US Dollar (USD) remains subdued amid rising odds of the Federal Reserve (Fed) cutting interest rates.

The Australian Bureau of Statistics (ABS) showed that Retail Sales rose 0.2% month-over-month in May, compared to a flat 0% in April (revised from -0.1%). The reading came in below the market expectations of 0.4%. Meanwhile, Building Permits rose by 3.2% in May, as compared to the previous decline of 4.1%, but falling short of expected 4.8% increase.

Additionally, the AUD/USD pair appreciated due to improved market sentiment as the US President Donald Trump’s top trade officials were seeking phased tariff deals with the most engaged countries as they pushed on to reach an agreement by the July 9 deadline, when Trump had vowed to reimpose his harshest levies, per the Financial Times.

Australian Dollar declines as US Dollar halts losing streak

  • The US Dollar Index (DXY), which measures the value of the US Dollar against six major currencies, is halting its losing streak that began on June 19 and is trading at around 96.70 at the time of writing. The US ADP Employment Change report for June will be in the spotlight later on Wednesday.
  • Fed Chair Jerome Powell highlighted on Tuesday that the US central bank will gauge more data before it initiates monetary policy easing, but he did not rule out a rate reduction in the July meeting.
  • US Treasury Secretary Bessent said that he believes the Federal Reserve (Fed) will cut interest rates earlier than the fall, but they will definitely cut rates by September at the latest, per Fox News.
  • US ISM Manufacturing PMI advanced to 49.0 from 48.5 in May, coming in above experts’ expectations of 48.8. The readings indicated that economic activity in the United States (US) manufacturing sector improved in June. Meanwhile, US JOLTS Job Openings rose to 7.76 million in May, compared to 7.395 million openings reported in April. This figure came in above the market expectation of 7.3 million.
  • The US Senate has passed some version of President Trump’s “big, beautiful budget bill”, which now heads to the US House of Representatives for a final pass and another vote. Trump, who campaigned on eliminating the US’s federal deficit overhang, is poised to write his spending bill into law, which will add trillions of dollars to the US debt load over the next decade.
  • The US Senate has narrowly passed the President Trump’s “big, beautiful budget bill”, with a thin 51-50 margin. The bill now heads to the US House of Representatives, where it is expected to face a tight vote. Trump, who campaigned on eliminating the US federal deficit, is now set to sign a spending bill into law that will add trillions of dollars to the national debt over the next decade.
  • China’s Caixin Manufacturing Purchasing Managers’ Index improved to 50.4 in June from 48.3 in May, according to the latest data released on Tuesday. The reading surpassed the market forecast of 49.0. It is important to note that any economic change in China could impact AUD as both countries are close trade partners.
  • Australia’s S&P Global Manufacturing Purchasing Managers’ Index (PMI) fell to 50.6 in June from the previous 51.0. The output declined to its lowest reading since February due to adequate client inventories and weaker market conditions, data showed on Tuesday.

Australian Dollar falls to near 0.6560 after pulling back from eight-month highs

The AUD/USD pair is trading around 0.6570 on Wednesday. The daily technical analysis suggested a prevailing bullish bias as the pair remains within the ascending channel pattern. The 14-day Relative Strength Index (RSI) remains above the 50 mark, strengthening the bullish sentiment. Additionally, the pair rises above the nine-day Exponential Moving Average (EMA), indicating that short-term price momentum is stronger.

On the upside, the AUD/USD pair could rebound to the fresh eight-month high of 0.6590, which was recorded on July 1. A successful breach above this level could support the pair to test the upper boundary of the ascending channel around 0.6650.

The nine-day EMA at 0.6540 appears as the primary support. A break below this level would weaken the short-term price momentum and put downward pressure on the AUD/USD pair to test the lower boundary of the ascending channel around 0.6490, aligned with the 50-day EMA at 0.6462.

AUD/USD: Daily Chart

Australian Dollar PRICE Today

The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the weakest against the US Dollar.

USDEURGBPJPYCADAUDNZDCHF
USD0.19%0.12%0.24%0.07%0.06%0.03%0.16%
EUR-0.19%-0.11%0.03%-0.13%-0.11%-0.05%-0.02%
GBP-0.12%0.11%0.14%-0.04%-0.06%0.03%0.05%
JPY-0.24%-0.03%-0.14%-0.15%-0.19%-0.16%-0.08%
CAD-0.07%0.13%0.04%0.15%0.00%0.05%0.09%
AUD-0.06%0.11%0.06%0.19%-0.01%0.12%0.09%
NZD-0.03%0.05%-0.03%0.16%-0.05%-0.12%0.02%
CHF-0.16%0.02%-0.05%0.08%-0.09%-0.09%-0.02%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).

Australian Dollar FAQs

One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.

The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.

China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.

Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.

The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.

Source: https://www.fxstreet.com/news/australian-dollar-loses-ground-following-disappointing-retail-sales-data-202507020223