AUD/USD declines to near 0.6670 as Australian Dollar weakens on sour market mood
|- AUD/USD falls sharply to near 0.6670 as dismal market mood weighs on the Australian Dollar.
- The US strike on Venezuela has triggered a risk-off market mood.
- This week, investors will focus on the Australian CPI and the US NFP data.
The AUD/USD pair is down 0.26% to near 0.6670 during the European trading session on Monday. The Aussie pair is under pressure as the Australian Dollar (AUD) underperforms its peers amid a risk-off market mood.
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 | 0.30% | 0.23% | -0.03% | 0.34% | 0.30% | 0.31% | 0.32% | |
| EUR | -0.30% | -0.07% | -0.31% | 0.04% | -0.01% | 0.01% | 0.02% | |
| GBP | -0.23% | 0.07% | -0.25% | 0.11% | 0.07% | 0.08% | 0.09% | |
| JPY | 0.03% | 0.31% | 0.25% | 0.37% | 0.32% | 0.33% | 0.34% | |
| CAD | -0.34% | -0.04% | -0.11% | -0.37% | -0.05% | -0.03% | -0.02% | |
| AUD | -0.30% | 0.00% | -0.07% | -0.32% | 0.05% | 0.01% | 0.02% | |
| NZD | -0.31% | -0.01% | -0.08% | -0.33% | 0.03% | -0.01% | 0.00% | |
| CHF | -0.32% | -0.02% | -0.09% | -0.34% | 0.02% | -0.02% | -0.01% |
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).
Market sentiment turns risk-averse as the United States (US) struck Venezuela and captured President Nicolas Maduro over drug-trafficking charges. US President Donald Trump has also threatened to conduct raids in Colombia and Iran.
Dismal market mood has forced investors to shift to the safe-haven fleet, pushing the US Dollar Index (DXY) higher to an over three-week high of 98.80.
On the domestic front, the AUD will be influenced by the Consumer Price Index (CPI) data for November. Investors will closely monitor the Australian inflation data as it will influence market expectations for the Reserve Bank of Australia’s (RBA) monetary policy outlook. In the last policy meeting of 2025, the RBA hinted that it could tighten interest rates if inflation proves to be persistent.
This week, the major trigger for the US Dollar will be the US Nonfarm Payrolls (NFP) data for December, which will be released on Friday.
In Monday’s session, investors will focus on the US ISM Manufacturing PMI data for December, which will be published at 15:00 GMT. The Manufacturing PMI is expected to increase slightly to 48.3 from 48.2 in November, suggesting that the business activity contracted again, but at a slightly moderate pace.
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
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