Australian Dollar Price Forecast: Extra gains in the pipeline amid hot inflation and cautious RBA
- AUD/USD added to the ongoing move higher past the 0.6500 barrier.
- The US Dollar remained on the back foot, weighed down by tariffs and the Trump-Fed saga.
- Australian Private Capex rose by 0.2% QoQ in the April-June period.
The Australian Dollar (AUD) kept climbing on Thursday, with AUD/USD pushing past 0.6500 after Wednesday’s advance. The move was helped by a softer US Dollar (USD), pressured by uncertainty over the White House’s trade policy, Federal Reserve (Fed) rate-cut bets, and renewed tensions around Trump’s criticism of the central bank.
Inflation still running hot
Australia’s July Monthly CPI Indicator (Weighted Mean) rose to 2.8%, up from 1.9% in the previous month. Q2 CPI added 0.7% QoQ and 2.1% YoY, keeping inflation concerns alive and backing the Reserve Bank of Australia’s (RBA) cautious stance.
Solid economic data
Beyond prices, the economy has shown resilience. Early August PMIs beat expectations — manufacturing at 52.9, services at 55.1. Retail sales jumped 1.2% in June, and the trade surplus widened to A$5.365B. The domestic labour market also surprised on the upside, with unemployment ticking down to 4.2% amid and increase of 24.5K jobs.
Thursday’s release of Private Capital Expenditure showed a 0.2% increase in Q2, pointing to a healthy investment in buildings, structures, and equipment.
RBA: Data-dependent and cautious
The RBA cut rates by 25 basis points earlier this month to 3.60% and trimmed its 2025 growth outlook. Governor Michele Bullock pushed back on deeper cuts, stressing that policy remains “data-dependent.” Markets now see another 25 basis points cut by November 5.
Minutes released this week flagged that faster easing could happen if the labour market softens, though a slower path is likely if conditions stay tight.
China still the swing factor
China’s numbers remain mixed. Its economy expanded 5.2% YoY in Q2, industrial output rose 7%, but retail sales disappointed. PMIs slipped back under 50, the trade surplus narrowed, and inflation was flat. The People’s Bank of China (PBoC) left lending rates unchanged last week, as expected.
Speculators lean bearish
CFTC data showed net shorts on the AUD at their highest since April 2024, with open interest hitting a two-month peak, highlighting strong bearish positioning.
Tech picture: Stuck in a range
Right now AUD/USD is bouncing between 0.6400 and 0.6600.
On the upside, the first big test is the 2025 ceiling at 0.6625 (July 24). If buyers clear that, the next level is the November 2024 peak at 0.6687 (November 7), with the bigger psychological target at 0.7000 further out.
On the other hand, support is holding at 0.6414 (August 21). A break lower could bring the 200-day Simple Moving Average (SMA) at 0.6384 into play, followed by the June floor at 0.6372 (June 23).
Momentum signals remain mixed: The Relative Strength Index (RSI) is hovering near 56, showing some upside conviction, while the Average Directional Index (ADX) below 15 suggests the trend isn’t strong.
AUD/USD daily chart
Short-term outlook
Until a clear catalyst emerges, be it stronger Chinese data, a meaningful shift from the Fed, or a surprise from the RBA, AUD/USD looks set to stay locked in its current 0.6400–0.6600 range.
GDP FAQs
A country’s Gross Domestic Product (GDP) measures the rate of growth of its economy over a given period of time, usually a quarter. The most reliable figures are those that compare GDP to the previous quarter e.g Q2 of 2023 vs Q1 of 2023, or to the same period in the previous year, e.g Q2 of 2023 vs Q2 of 2022. Annualized quarterly GDP figures extrapolate the growth rate of the quarter as if it were constant for the rest of the year. These can be misleading, however, if temporary shocks impact growth in one quarter but are unlikely to last all year – such as happened in the first quarter of 2020 at the outbreak of the covid pandemic, when growth plummeted.
A higher GDP result is generally positive for a nation’s currency as it reflects a growing economy, which is more likely to produce goods and services that can be exported, as well as attracting higher foreign investment. By the same token, when GDP falls it is usually negative for the currency. When an economy grows people tend to spend more, which leads to inflation. The country’s central bank then has to put up interest rates to combat the inflation with the side effect of attracting more capital inflows from global investors, thus helping the local currency appreciate.
When an economy grows and GDP is rising, people tend to spend more which leads to inflation. The country’s central bank then has to put up interest rates to combat the inflation. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold versus placing the money in a cash deposit account. Therefore, a higher GDP growth rate is usually a bearish factor for Gold price.
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Author
Pablo Piovano
FXStreet
Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.
