Australian Dollar remains subdued as US Dollar steadies on market caution
|- Australian Dollar could gain amid cautious sentiment surrounding the RBA outlook.
- Westpac Consumer Confidence fell 1.7% MoM in January to a three-month low of 92.9, extending December’s 9.0% drop.
- The US Dollar receives support as traders adopt caution ahead of December's inflation data.
The Australian Dollar declines against the US Dollar on Tuesday following the release of Australia’s Westpac Consumer Confidence, which fell 1.7% month-over-month (MoM) in January to a three-month low of 92.9, extending December’s sharp 9.0% drop amid shifting rate expectations.
Reserve Bank of Australia (RBA) Governor Michele Bullock is expected to comment on concerns over the Fed’s independence after federal prosecutors threatened to indict Chair Jerome Powell over his congressional testimony on a building renovation, a move Powell has described as an attempt to undermine the central bank’s independence.
ANZ Job Advertisements declined 0.5% in December, following an upwardly revised 1.5% drop in the prior month. Meanwhile, household spending increased 1.0% month-on-month in November 2025, easing from a revised 1.4% rise in October, as consumers remained cautious amid elevated interest rates and persistent inflation.
Australia’s mixed November Consumer Price Index (CPI) left the Reserve Bank of Australia’s (RBA) policy outlook uncertain. However, RBA Deputy Governor Andrew Hauser said that the November inflation data was largely as expected. Hauser added that interest rate cuts are unlikely anytime soon. Focus now shifts to the quarterly CPI report due later this month for clearer guidance on the RBA’s next policy move.
US Dollar gains ahead of inflation data
- The US Dollar Index (DXY), which measures the value of the US Dollar against six major currencies, is holding ground and trading around 98.90 at the time of writing. Traders await the Consumer Price Index (CPI) data for December due on Tuesday, which could offer clues on the Federal Reserve’s (Fed) policy path.
- The Greenback faced challenges amid expectations of a dovish Federal Reserve (Fed). December’s slower-than-expected US jobs growth suggests the US central bank could hold interest rates steady later this month.
- Markets are pricing in two Federal Reserve rate cuts this year, starting in June, though an upside inflation surprise could curb easing prospects. The CME Group's FedWatch tool indicates that the Fed funds futures price indicates a 95% probability that the US central bank will keep rates unchanged at its January 27–28 meeting.
- US Nonfarm Payrolls (NFP) rose by 50,000 in December, falling short of November's 56,000 (revised from 64,000) and came in weaker than the market expectations of 60,000. However, the Unemployment Rate ticked lower to 4.4% in December from 4.6% in November, while the Average Hourly Earnings climbed to 3.8% YoY in December from 3.6% in the previous reading.
- Federal Reserve Bank of New York President John Williams said late Monday that US monetary policy is “well positioned” to steer inflation back to its target without damaging employment. He indicated there is no immediate need to resume interest-rate cuts as the central bank edges closer to a neutral policy stance.
- Richmond Fed President Tom Barkin said the decline in the unemployment rate was welcome and described job growth as modest but stable. Barkin added that it is difficult to find firms outside healthcare or AI that are hiring and said it remains unclear whether the labor market will tilt toward more hiring or more firing.
Australian Dollar remains above 0.6700, nine-day EMA
AUD/USD is trading around 0.6710 on Tuesday. Daily chart analysis shows the pair rebounded toward an ascending channel, signaling a renewed bullish bias. The 14-day Relative Strength Index (RSI) at 60.55 remains above the midpoint, supporting upside momentum.
The AUD/USD pair could target 0.6766, its highest level since October 2024. Further gains could see the pair test the upper boundary of the ascending channel near 0.6860.
The immediate support lies at the nine-day Exponential Moving Average (EMA) of 0.6705, followed by the 50-day EMA at 0.6634. Further losses would open the downside toward 0.6414, the lowest since June 2025.
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 New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.00% | -0.09% | 0.35% | -0.06% | 0.05% | -0.18% | -0.06% | |
| EUR | -0.01% | -0.09% | 0.39% | -0.07% | 0.04% | -0.22% | -0.06% | |
| GBP | 0.09% | 0.09% | 0.43% | 0.04% | 0.14% | -0.12% | 0.02% | |
| JPY | -0.35% | -0.39% | -0.43% | -0.42% | -0.31% | -0.57% | -0.42% | |
| CAD | 0.06% | 0.07% | -0.04% | 0.42% | 0.11% | -0.14% | -0.01% | |
| AUD | -0.05% | -0.04% | -0.14% | 0.31% | -0.11% | -0.25% | -0.11% | |
| NZD | 0.18% | 0.22% | 0.12% | 0.57% | 0.14% | 0.25% | 0.14% | |
| CHF | 0.06% | 0.06% | -0.02% | 0.42% | 0.00% | 0.11% | -0.14% |
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).
Interest rates FAQs
Interest rates are charged by financial institutions on loans to borrowers and are paid as interest to savers and depositors. They are influenced by base lending rates, which are set by central banks in response to changes in the economy. Central banks normally have a mandate to ensure price stability, which in most cases means targeting a core inflation rate of around 2%. If inflation falls below target the central bank may cut base lending rates, with a view to stimulating lending and boosting the economy. If inflation rises substantially above 2% it normally results in the central bank raising base lending rates in an attempt to lower inflation.
Higher interest rates generally help strengthen a country’s currency as they make it a more attractive place for global investors to park their money.
Higher interest rates overall weigh on the price of Gold because they increase the opportunity cost of holding Gold instead of investing in an interest-bearing asset or placing cash in the bank. If interest rates are high that usually pushes up the price of the US Dollar (USD), and since Gold is priced in Dollars, this has the effect of lowering the price of Gold.
The Fed funds rate is the overnight rate at which US banks lend to each other. It is the oft-quoted headline rate set by the Federal Reserve at its FOMC meetings. It is set as a range, for example 4.75%-5.00%, though the upper limit (in that case 5.00%) is the quoted figure. Market expectations for future Fed funds rate are tracked by the CME FedWatch tool, which shapes how many financial markets behave in anticipation of future Federal Reserve monetary policy decisions.
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