The Australian Dollar (AUD) edges lower against the US Dollar (USD) after opening from a gap up on Monday due to optimism over progress in the United States (US)–China trade negotiations. Traders await the key upcoming Q3 and the September monthly inflation data for Australia this week which could shape the Reserve Bank of Australia’s (RBA) policy outlook.
The AUD/USD pair received support after United States (US) and Chinese negotiators reached a consensus on major disputes, which paves the way for Presidents Donald Trump and Xi Jinping to meet on Thursday to finalize a trade deal aimed at easing tensions. Officials in Malaysia announced after two days of talks that both sides had agreed on key issues, including export controls, fentanyl, and shipping levies. Any shift in China’s economic conditions could also affect the Australian dollar (AUD), given the close trade ties between China and Australia.
US Treasury Secretary Scott Bessent told CBS News that President Trump’s threat to impose 100% tariffs on Chinese goods “is effectively off the table.” Bessent added that China has agreed to make “substantial” soybean purchases and to postpone its rare-earth export controls “for a year while they re-examine it.”
US Dollar struggles following softer inflation data
- The US Dollar Index (DXY), which measures the value of the US Dollar against six major currencies, is remaining subdued and trading around 98.90 at the time of writing. The Greenback struggles as softer US inflation data reinforce the Federal Reserve (Fed) rate cut bets.
- The US Bureau of Labor Statistics (BLS) reported on Friday that the US Consumer Price Index (CPI) rose 3.0% year-over-year (YoY) in September, following a 2.9% increase in the prior month. This reading came in below the market expectation of 3.1%. Meanwhile, the monthly CPI increased 0.3%, against the 0.4% rise seen in August. The core CPI increased 0.2% month-over-month, compared to the market consensus of 0.3%, while the yearly core CPI was up 3.0% in September.
- The CME FedWatch Tool indicates that markets are now pricing in nearly a 97% chance of a Fed rate cut in October and a 96% possibility of another reduction in December.
- The preliminary Australia’s S&P Global Manufacturing Purchasing Managers Index (PMI) fell to 49.7 in October from 51.4 prior. Meanwhile, Services PMI rose to 53.1 in October from the previous reading of 52.4, while the Composite PMI increased to 52.6 in October against 52.4 prior.
- Traders expect the Reserve Bank of Australia (RBA) to deliver a rate cut after Australia’s latest employment report threw an unexpected curveball, with the jobless rate climbing to its highest level in nearly four years this September. ASX 30 Day Interbank Cash Rate Futures indicate a 67% expectation of an interest rate decrease to 3.35% at the next RBA Board meeting.
Australian Dollar pulls back from 50-day EMA near 0.6550
AUD/USD is trading around 0.6530 on Monday. Technical analysis of a daily chart suggests a potential for weakening of a bearish bias, with the pair positioned near the upper boundary of the descending channel. The pair is trading above the nine-day Exponential Moving Average (EMA), suggesting the short-term price momentum is stronger.
On the upside, the immediate barrier lies at the 50-day EMA of 0.6540, followed by the descending channel’s upper boundary around 0.6550. A successful break above this confluence resistance zone would support the AUD/USD pair to explore the region around the 12-month high of 0.6707, which was recorded on September 17.
The initial support lies at the nine-day EMA of 0.6513. A break below this level would weaken the short-term price momentum and prompt the AUD/USD pair to navigate the area around the four-month low of 0.6414, followed by the lower boundary of the descending channel around 0.6390.
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 strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.02% | -0.09% | 0.09% | -0.05% | -0.29% | -0.14% | 0.01% | |
| EUR | -0.02% | -0.08% | 0.09% | -0.05% | -0.27% | -0.16% | 0.04% | |
| GBP | 0.09% | 0.08% | 0.16% | 0.04% | -0.19% | -0.08% | 0.11% | |
| JPY | -0.09% | -0.09% | -0.16% | -0.15% | -0.41% | -0.24% | -0.08% | |
| CAD | 0.05% | 0.05% | -0.04% | 0.15% | -0.24% | -0.10% | 0.09% | |
| AUD | 0.29% | 0.27% | 0.19% | 0.41% | 0.24% | 0.12% | 0.31% | |
| NZD | 0.14% | 0.16% | 0.08% | 0.24% | 0.10% | -0.12% | 0.18% | |
| CHF | -0.01% | -0.04% | -0.11% | 0.08% | -0.09% | -0.31% | -0.18% |
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).
Tariffs FAQs
Tariffs are customs duties levied on certain merchandise imports or a category of products. Tariffs are designed to help local producers and manufacturers be more competitive in the market by providing a price advantage over similar goods that can be imported. Tariffs are widely used as tools of protectionism, along with trade barriers and import quotas.
Although tariffs and taxes both generate government revenue to fund public goods and services, they have several distinctions. Tariffs are prepaid at the port of entry, while taxes are paid at the time of purchase. Taxes are imposed on individual taxpayers and businesses, while tariffs are paid by importers.
There are two schools of thought among economists regarding the usage of tariffs. While some argue that tariffs are necessary to protect domestic industries and address trade imbalances, others see them as a harmful tool that could potentially drive prices higher over the long term and lead to a damaging trade war by encouraging tit-for-tat tariffs.
During the run-up to the presidential election in November 2024, Donald Trump made it clear that he intends to use tariffs to support the US economy and American producers. In 2024, Mexico, China and Canada accounted for 42% of total US imports. In this period, Mexico stood out as the top exporter with $466.6 billion, according to the US Census Bureau. Hence, Trump wants to focus on these three nations when imposing tariffs. He also plans to use the revenue generated through tariffs to lower personal income taxes.