AUD/USD Forecast and News

The Chinese Gross Domestic Product (GDP) rate rose 1.1% in Q2, against the market consensus of a 0.9% increase. Moreover, Retail Sales increased by 4.8% YoY in June, against the 5.6% expected and 6.4% prior, while Industrial Production came in at 6.8%, against the 5.6% expected.

The National Bureau of Statistics (NBS) shared its economic outlook during its press conference, stating that overall economic performance in the first half of the year was stable, with steady progress. However, it emphasized the need to improve investment structure and, environment. It also added that the real estate market is heading towards stabilization.

The AUD/USD pair may face challenges as the US Dollar may regain its ground amid renewed geopolitical concerns. US President Donald Trump has threatened to impose “very severe” tariffs on Russia if no peace deal is reached within 50 days. Trump also warned of secondary tariffs on countries importing Russian Oil.

Australia’s Westpac Consumer Confidence climbed 0.6% month-over-month in July, following a 0.5% gain in June. Although the mood lifted slightly, the latest outcome underscored clear disappointment after the Reserve Bank of Australia (RBA) unexpectedly kept rates unchanged at its July meeting.

The RBA may maintain the interest rates at its next August meeting to get inflation on track to sustainably return to the 2-2.5% target. RBA Governor Michele Bullock stated that inflation risks persist, citing the elevated unit labor costs and weak productivity as factors that could drive inflation above current projections. Meanwhile, RBA Deputy Governor Andrew Hauser highlighted growing global economic uncertainty and warned that the impact of tariffs on the world economy could be significant.

Australian Dollar edges higher as US Dollar holds losses ahead of CPI data

The US Dollar Index (DXY), which measures the value of the US Dollar against six major currencies, is holding losses at around 98.10 at the time of writing. Investors are likely awaiting June's Consumer Price Index (CPI) data on Tuesday to gain fresh impetus over the Federal Reserve’s (Fed) monetary outlook.

President Trump, alongside NATO Secretary-General Mark Rutte, confirmed that European allies will purchase billions of dollars’ worth of American-made weapons, such as Patriot missile systems. These weapons will be transferred to Ukraine in the coming weeks to tackle intensified Russian attacks.

The US government immediately imposed a 17% duty on Monday on most imports of fresh tomatoes from Mexico after negotiations ended without an agreement to avert the tariff. Trump announced, on Saturday, a 30% tariff on imports from the European Union (EU) and Mexico starting August 1. He also proposed a blanket tariff rate of 15%-20% on other trading partners, an increase from the current 10% baseline rate. In response, the European Union announced on Sunday that it will extend its pause on retaliatory measures against US tariffs until early August, in hopes of reaching a negotiated agreement.

Chicago Fed President Austan Goolsbee stated that ongoing trade policy at the hands of Trump's constant tariff threats could hamper the ability of the Fed to deliver rate reductions that both the broader market and Trump himself want to see.

The US government posted a $27 billion budget surplus in June, fueled by a surge in customs duties revenue, which reached a record $27.2 billion. This jump in tariff collections, largely stemming from policies introduced during the Trump administration, contributed to a 13% increase in total budget receipts, which rose to $526 billion. Meanwhile, federal spending declined by 7% to $499 billion.

The Federal Open Market Committee (FOMC) Minutes from the June 17–18 meeting, released last week, indicated that policymakers largely maintained a wait-and-see stance regarding future interest rate decisions.

China's Trade Balance arrived at CNY585.96 billion for June, narrowing from the previous figure of CNY743.56 billion. Chinese Exports climbed 7.2% year-over-year in June, following 6.3% in April. Meanwhile, imports increased 2.3% YoY in the same period, recovering from a previous decline of 2.1%.

A Chinese customs spokesperson said that China’s Exports will continue to forge ahead in the next stage despite challenges. It is important to note that Chinese economic data could impact the AUD, as China is a major trading partner of Australia.

Chinese President Xi Jinping is expected to meet Australia’s Prime Minister Anthony Albanese on Tuesday in Beijing to discuss trade and security amid global trade turmoil and pressure from the US over security commitments to Taiwan, per the Financial Times.

The Reuters survey poll showed that 30 analysts forecasted the Reserve Bank of Australia to cut the cash rate by 25 basis points to 3.60% in August. Australia’s four major banks, ANZ, CBA, NAB, and Westpac, also support the rate cut.

Australian Treasurer Jim Chalmers said that the Reserve Bank of Australia’s decision to hold rates was neither the outcome millions of Australians had hoped for nor what markets had anticipated. Chalmers added that the central bank has signaled a clear direction on inflation and interest rates moving forward.