Australian Dollar remains tepid as US Dollar remains stable ahead of PCE Price Index data – Crypto News – Crypto News
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Australian Dollar remains tepid as US Dollar remains stable ahead of PCE Price Index data – Crypto News

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  • The Australian Dollar depreciates as global trade concerns intensify ahead of potential US tariffs.
  • A Reuters poll suggests the Reserve Bank of Australia (RBA) will keep rates steady in April.
  • The US Gross Domestic Product Annualized grew by 2.4% in Q4 2024, exceeding the 2.3% forecast.

The Australian Dollar (AUD) weakens against the US Dollar (USD) on Friday, erasing gains from the previous session. The AUD/USD pair declines amid heightened risk aversion, driven by concerns over impending US auto tariffs.

US President Donald Trump signed an order on Wednesday imposing a 25% tariff on auto imports, further escalating global trade tensions. These aggressive trade measures are likely to strain relations with key trading partners, even ahead of his planned reciprocal tariffs set for April 2.

A Reuters poll on the Reserve Bank of Australia (RBA) indicates that the central bank will hold rates steady in April. All 39 economists surveyed expect the RBA to maintain the cash rate at 4.10% on April 1. However, the median forecast predicts two rate cuts in 2025, with 25 basis point reductions in May and September, bringing the rate down to 3.60% by Q3.

The RBA is expected to ease rates gradually due to persistently high core inflation at 3.2%, low unemployment, and recovering economic growth. The potential May rate cut hinges on Q1 inflation data, with approximately 75% of economists anticipating a reduction.

Westpac economists believe the RBA will keep the cash rate unchanged at its April 1 policy meeting, describing it as a “dead rubber” in the broader monetary policy context. However, they maintain their forecast for a rate cut in May.

Australian Prime Minister Anthony Albanese announced on Friday that a national election will be held on May 3, kicking off a five-week campaign expected to focus on cost-of-living concerns. Albanese’s Labor Party secured a majority in the 2022 federal election, but recent polls indicate a tight race with the opposition Liberal-National coalition once votes from smaller parties are factored in.

Australian Dollar struggles as US Dollar steadies amid increased risk aversion

  • The US Dollar Index (DXY), which tracks the USD against six major currencies, hovers around 104.30, facing pressure due to lower US yields, standing at 3.99% for the 2-year bond and 4.35% for the 10-year bond at the time of writing.
  • US Gross Domestic Product (GDP) Annualized expanded at a rate of 2.4% in Q4 2024, surpassing the 2.3% forecast, according to data released on Thursday. Investors now await the US Personal Consumption Expenditures (PCE) Price Index, set for release later on Friday.
  • Moody’s has warned that increased tariffs and tax cuts could significantly widen government deficits, potentially leading to a US debt rating downgrade and rising Treasury yields.
  • S&P Global cautioned that policy uncertainty in the US could dampen global economic growth, while Fitch Ratings highlighted that current tariffs may severely impact smaller economies such as Brazil, India, and Vietnam, making it more challenging for them to afford US goods.
  • Federal Reserve (Fed) Bank of Boston President Susan Collins stated on Thursday that the Fed faces a difficult decision between maintaining a restrictive policy stance or acting pre-emptively in anticipation of deteriorating economic conditions.
  • Meanwhile, Federal Reserve Bank of Richmond President Thomas Barkin warned that economic uncertainty stemming from the Trump administration’s trade policies could force the Fed into a more cautious, wait-and-see approach than markets are expecting.
  • St. Louis Fed President Alberto Musalem made strong remarks on Wednesday, joining a growing number of Fed policymakers warning about the Trump administration’s tariff policies. Musalem cautioned that these measures are disrupting the stable US economy, increasing uncertainty, and driving inflation higher.
  • President Trump announced plans on Wednesday to reduce tariffs on China to facilitate ByteDance’s sale of TikTok’s US operations. While he emphasized that the tariffs hold greater value than TikTok itself, he suggested that a minor tariff reduction could aid in finalizing the deal. Trump also hinted at the possibility of extending the deadline for the TikTok sale once again.
  • On Wednesday, Trump suggested plans to impose tariffs on copper imports within weeks, although the Commerce Department initially had until November 2025 to decide on the matter. This development, however, provided some support for the AUD, as Australia is a key copper exporter.
  • Australian Treasurer Jim Chalmers presented the 2025/26 budget on Tuesday, outlining key economic forecasts and tax cuts totaling approximately A$17.1 billion across two rounds. The budget deficit is projected at A$27.6 billion for 2024-25 and A$42.1 billion for 2025-26. GDP growth is expected to reach 2.25% in the fiscal year 2026 and 2.5% in 2027. The tax cuts appear to be aimed at strengthening political support.

Australian Dollar holds near 0.6300, confluence of nine-day EMA, upper channel boundary

AUD/USD hovers near 0.6290 on Friday, with technical indicators suggesting a potential bullish shift as the pair challenges its descending channel pattern. However, the 14-day Relative Strength Index (RSI) remains just below 50, signaling persistent bearish pressure.

The nine-day Exponential Moving Average (EMA) at 0.6304 acts as immediate resistance. A breakout above this level could strengthen short-term momentum, opening the door for a test of the monthly high at 0.6391, last reached on March 18, followed by a three-month high at 0.6408.

On the downside, failure to hold gains may push the AUD/USD pair back into its descending channel, reinforcing the bearish outlook. In this scenario, the pair could drop toward the seven-week low of 0.6187, recorded on March 5, followed by the channel’s lower boundary at 0.6170.

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 Japanese Yen.

  USD EUR GBP JPY CAD AUD NZD CHF
USD   0.00% -0.02% -0.18% 0.05% 0.13% 0.26% 0.03%
EUR -0.01%   -0.05% -0.23% 0.02% 0.11% 0.22% 0.00%
GBP 0.02% 0.05%   -0.18% 0.07% 0.15% 0.27% 0.06%
JPY 0.18% 0.23% 0.18%   0.24% 0.32% 0.44% 0.23%
CAD -0.05% -0.02% -0.07% -0.24%   0.08% 0.19% -0.01%
AUD -0.13% -0.11% -0.15% -0.32% -0.08%   0.11% -0.10%
NZD -0.26% -0.22% -0.27% -0.44% -0.19% -0.11%   -0.21%
CHF -0.03% -0.01% -0.06% -0.23% 0.01% 0.10% 0.21%  

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).

RBA FAQs

The Reserve Bank of Australia (RBA) sets interest rates and manages monetary policy for Australia. Decisions are made by a board of governors at 11 meetings a year and ad hoc emergency meetings as required. The RBA’s primary mandate is to maintain price stability, which means an inflation rate of 2-3%, but also “..to contribute to the stability of the currency, full employment, and the economic prosperity and welfare of the Australian people.” Its main tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will strengthen the Australian Dollar (AUD) and vice versa. Other RBA tools include quantitative easing and tightening.

While inflation had always traditionally been thought of as a negative factor for currencies since it lowers the value of money in general, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Moderately higher inflation now tends to lead central banks to put up their interest rates, which in turn has the effect of attracting more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in the case of Australia is the Aussie Dollar.

Macroeconomic data gauges the health of an economy and can have an impact on the value of its currency. Investors prefer to invest their capital in economies that are safe and growing rather than precarious and shrinking. Greater capital inflows increase the aggregate demand and value of the domestic currency. Classic indicators, such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can influence AUD. A strong economy may encourage the Reserve Bank of Australia to put up interest rates, also supporting AUD.

Quantitative Easing (QE) is a tool used in extreme situations when lowering interest rates is not enough to restore the flow of credit in the economy. QE is the process by which the Reserve Bank of Australia (RBA) prints Australian Dollars (AUD) for the purpose of buying assets – usually government or corporate bonds – from financial institutions, thereby providing them with much-needed liquidity. QE usually results in a weaker AUD.

Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the Reserve Bank of Australia (RBA) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the RBA stops buying more assets, and stops reinvesting the principal maturing on the bonds it already holds. It would be positive (or bullish) for the Australian Dollar.

 

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