Key Takeaways
- AUD/USD saw gains, trading near 0.6590 amid positive developments from the US-China presidential meeting and stronger Australian inflation data.
- US President Trump announced tariff reductions and resolution of the rare earth dispute, while President Xi emphasized long-term cooperation.
- Australia’s inflation figures exceeded expectations, reducing the likelihood of near-term interest rate cuts by the Reserve Bank of Australia (RBA).
- The US Dollar Index (DXY) declined amid policy uncertainties from the Federal Reserve, which enacted a 25-basis-point rate cut.
- Technical analysis suggests AUD/USD is trading within a neutral pattern but shows signs of a potential bullish shift if key resistance levels are breached.
AUD/USD Recovers Amidst US-China Summit and Inflation Data
The AUD/USD pair is experiencing an upward trend, trading around the 0.6590 mark during Thursday’s Asian trading session. This recovery follows recent losses, further supported by the highly anticipated meeting between US President Donald Trump and China’s President Xi Jinping in South Korea. Given the close trade relations between China and Australia, any fluctuations in China’s economic landscape can significantly impact the Australian Dollar.
Key outcomes from the US-China summit included President Trump’s announcement of a reduction in tariffs on China from 57% to 47%. He also confirmed the resolution of the rare earth dispute and the immediate resumption of soybean purchases by China. Additionally, China committed to intensifying its efforts to combat the fentanyl problem. However, President Trump indicated that not all issues were fully resolved during the discussion.
Chinese President Xi Jinping, speaking after the meeting, highlighted the importance of long-term interests of cooperation between the two nations. He stated that China has no intention of challenging or replacing any other country. President Xi also pointed to promising prospects for collaboration in areas such as countering telecom fraud, money laundering, and AI technologies.
Australian Economic Indicators Boost AUD
The Australian Dollar received a significant boost following the release of Australia’s third-quarter inflation and August Consumer Price Index (CPI) data, both of which came in hotter than anticipated. These robust figures have diminished expectations for immediate interest rate cuts by the Reserve Bank of Australia (RBA).
💡 RBA Governor Bullock recently commented on the labor market, noting that it remains relatively tight despite an unexpected increase in the unemployment rate.
US Dollar Dips Amidst Uncertain Federal Reserve Policy
The US Dollar Index (DXY), which tracks the dollar’s performance against a basket of major currencies, has weakened, reversing some of the gains from the previous session. It is currently trading around 98.90.
📊 The Federal Reserve (Fed) implemented a widely expected 25-basis-point interest rate cut on Wednesday, marking the second consecutive reduction. Despite this, some policymakers noted an uptick in inflationary pressures during the latter half of the year, though not substantial enough to halt further rate decreases.
The US Dollar had previously found support as the Fed indicated its intention to continue winding down its Quantitative Easing (QE) program, with the balance sheet reduction of mortgage-backed securities into long-term Treasuries set to conclude by December 1.
Fed Chair Jerome Powell stated during the post-meeting press conference that economic data provided little indication of significant changes in the outlook for employment and inflation since the September meeting. He mentioned that the ongoing government shutdown would likely dampen economic activity but expected these effects to reverse once the shutdown ends. Powell emphasized that a December rate cut is far from guaranteed, underscoring the prevailing uncertainty in the monetary policy path.
📌 Australia’s Trimmed Mean CPI for Q3 rose by 1.0% quarterly and 3.0% annually, surpassing market expectations of 0.8% and 2.7% respectively. Furthermore, the monthly CPI surged to 3.5% year-over-year in August, exceeding the expected 3.1% and the previous reading of 3.0%.
In contrast, the US Bureau of Labor Statistics reported that the US CPI increased by 3.0% year-over-year in September, slightly below the market consensus of 3.1% and following a 2.9% rise in the prior month. On a monthly basis, the CPI increased by 0.3%. The core CPI saw a 0.2% month-over-month increase, below the market expectation of 0.3%, with the annual core CPI standing at 3.0%.
Australian Dollar Approaches Key Resistance Level
The AUD/USD pair is currently positioned around 0.6590. Technical analysis of the daily chart reveals a neutral short-term outlook, with the pair trading within a defined rectangle pattern. However, its movement above the nine-day Exponential Moving Average (EMA) suggests a strengthening short-term price momentum.
⚡ The immediate upside target for the AUD/USD is the significant psychological barrier at 0.6600. A successful breach of this level, followed by surpassing the upper boundary of the rectangle pattern around 0.6630, could signal a bullish trend, potentially pushing the pair towards its 12-month high of 0.6707, recorded on September 17.
📍 Key support levels are situated at the nine-day EMA of 0.6549 and the 50-day EMA at 0.6546. A breakdown below these EMAs would weaken both short- and medium-term momentum, potentially leading the AUD/USD to test the lower boundary of the rectangle pattern near 0.6450, with further support at the four-month low of 0.6414.
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 Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.24% | -0.12% | 0.03% | -0.05% | -0.16% | -0.29% | -0.22% | |
| EUR | 0.24% | 0.11% | 0.30% | 0.19% | 0.07% | -0.05% | 0.02% | |
| GBP | 0.12% | -0.11% | 0.16% | 0.07% | -0.05% | -0.17% | -0.10% | |
| JPY | -0.03% | -0.30% | -0.16% | -0.12% | -0.21% | -0.37% | -0.29% | |
| CAD | 0.05% | -0.19% | -0.07% | 0.12% | -0.10% | -0.25% | -0.18% | |
| AUD | 0.16% | -0.07% | 0.05% | 0.21% | 0.10% | -0.13% | -0.04% | |
| NZD | 0.29% | 0.05% | 0.17% | 0.37% | 0.25% | 0.13% | 0.09% | |
| CHF | 0.22% | -0.02% | 0.10% | 0.29% | 0.18% | 0.04% | -0.09% |
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).
US-China Trade War FAQs
Generally speaking, a trade war is an economic conflict between two or more countries due to extreme protectionism on one end. It implies the creation of trade barriers, such as tariffs, which result in counter-barriers, escalating import costs, and hence the cost of living.
An economic conflict between the United States (US) and China began early in 2018, when President Donald Trump set trade barriers on China, claiming unfair commercial practices and intellectual property theft from the Asian giant. China took retaliatory action, imposing tariffs on multiple US goods, such as automobiles and soybeans. Tensions escalated until the two countries signed the US-China Phase One trade deal in January 2020. The agreement required structural reforms and other changes to China’s economic and trade regime and pretended to restore stability and trust between the two nations. However, the Coronavirus pandemic took the focus out of the conflict. Yet, it is worth mentioning that President Joe Biden, who took office after Trump, kept tariffs in place and even added some additional levies.
The return of Donald Trump to the White House as the 47th US President has sparked a fresh wave of tensions between the two countries. During the 2024 election campaign, Trump pledged to impose 60% tariffs on China once he returned to office, which he did on January 20, 2025. With Trump back, the US-China trade war is meant to resume where it was left, with tit-for-tat policies affecting the global economic landscape amid disruptions in global supply chains, resulting in a reduction in spending, particularly investment, and directly feeding into the Consumer Price Index inflation.
Final Thoughts
The AUD/USD pair is showing resilience, influenced by both international trade developments and domestic economic data. While short-term technicals suggest a neutral outlook, positive momentum could emerge with sustained upward price action.
Market participants will continue to monitor the evolving US-China trade relationship and the Federal Reserve’s monetary policy for further direction in currency markets.