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Australian Dollar advances as RBA stance supports recovery ahead of key US, China data

  • The Australian Dollar advances on Monday and recovers part of its recent losses after hitting an almost eight-week low.
  • The RBA's hawkish stance continues to support the AUD despite a favorable environment for the US Dollar.
  • Markets await US inflation data and China's trade figures for further clues on the global monetary policy outlook.

AUD/USD trades around 0.7070 at the time of writing on Monday, up 0.33% on the day, after touching a low near 0.7024, its weakest level in nearly two months. The pair's rebound comes as investors assess the impact of strong US labor market data and the monetary policy outlook on both sides of the Pacific.

The Australian Dollar (AUD) finds some support from the Reserve Bank of Australia's (RBA) ongoing hawkish stance. Last week, RBA Governor Michele Bullock reiterated that the central bank remains fully focused on bringing inflation under control, arguing that price pressures remain too high. She also stated that the Board is prepared to take whatever action is necessary to achieve its mandate of price stability and full employment.

This stance helps limit losses in the Australian Dollar (AUD), even as investors continued to favor the US Dollar (USD) following the release of the May US employment report.

On Friday, data showed that the United States (US) economy added 172K Nonfarm Payrolls (NFP) in May, well above market expectations of 85K. The previous month's reading was also revised higher. These results reinforced expectations of a more restrictive monetary policy from the Federal Reserve (Fed), with markets significantly increasing the chance of policy tightening over the coming months. According to the CME FedWatch tool, traders now see a 38% chance of a 25-basis-point (bps) rate hike at the September meeting, up from 22% a week ago.

However, the decline in the US Dollar Index (DXY) toward the 99.90 area after reaching a two-month high near 100.20 has provided some relief for AUD/USD. Iran's armed forces announced the end of their military operations against Israel, while warning that any future Israeli attacks could prompt a stronger response. Meanwhile, United States (US) President Donald Trump stated that discussions aimed at securing an immediate ceasefire between the two sides were progressing. The easing of geopolitical tensions weighed on safe-haven demand and contributed to the pullback in the US Dollar, offering some support to risk-sensitive currencies such as the Australian Dollar.

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 US Dollar.

USDEURGBPJPYCADAUDNZDCHF
USD-0.21%-0.12%-0.21%-0.03%-0.31%-0.57%-0.08%
EUR0.21%0.08%-0.02%0.17%-0.12%-0.35%0.11%
GBP0.12%-0.08%-0.11%0.09%-0.23%-0.44%0.02%
JPY0.21%0.02%0.11%0.16%-0.14%-0.34%0.09%
CAD0.03%-0.17%-0.09%-0.16%-0.30%-0.51%-0.08%
AUD0.31%0.12%0.23%0.14%0.30%-0.21%0.24%
NZD0.57%0.35%0.44%0.34%0.51%0.21%0.44%
CHF0.08%-0.11%-0.02%-0.09%0.08%-0.24%-0.44%

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).

Author

Ghiles Guezout

Ghiles Guezout is a Market Analyst with a strong background in stock market investments, trading, and cryptocurrencies. He combines fundamental and technical analysis skills to identify market opportunities.

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