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At a Glance
- The AUD/USD pair experienced a decline on Tuesday, reversing earlier gains, despite improved market sentiment stemming from a US-Australia critical minerals agreement.
- A new USD 8.5 billion critical minerals deal was signed by US President Trump and Australian Prime Minister Albanese, focusing on securing vital resources.
- The US Dollar Index (DXY) advanced, though the ongoing US government shutdown continues to cast a shadow over the economic outlook.
- Several Federal Reserve officials have signaled support for further interest rate cuts, influencing market expectations for monetary policy.
- The Australian Dollar faces technical resistance, trading within a descending channel and showing a bearish bias, with key support levels identified around 0.6414 and 0.6372.
US-Australia Critical Minerals Agreement Bolsters Trade Relations
The Australian Dollar (AUD) saw a dip against the US Dollar (USD) on Tuesday, failing to sustain its daily advances. The AUD/USD pair’s movements were influenced by a mixed sentiment, with the AUD finding some support from an improved market outlook attributed to progress on a significant trade agreement between the United States and Australia.
A pivotal moment occurred on Monday at the White House, where US President Donald Trump and Australian Prime Minister Anthony Albanese formalized an USD 8.5 billion critical minerals agreement. This accord is designed to guarantee access to Australia’s substantial rare-earth resources, a move that gains significance in light of China’s increasingly stringent export controls on similar materials.
Under the terms of this new pact, both the United States and Australia have committed to investing at least USD 1 billion each over the next six months. These investments will target mining and processing projects, with an additional agreement to establish a price floor for critical minerals. President Trump highlighted that the agreement had been the subject of negotiations over several months, while Prime Minister Albanese characterized it as elevating US-Australia relations to the next level.
Adding another layer to the geopolitical trade narrative, President Trump expressed optimism about reaching a fair deal with Chinese President Xi Jinping during their forthcoming meeting in South Korea. This suggests a potential de-escalation of trade tensions. However, taking a more assertive stance, US Trade Representative Jamieson Greer accused Beijing of engaging in a broader pattern of economic coercion against companies making strategic investments in key US industries. Any shifts in China’s economic performance could similarly impact the Australian dollar, given the deep trade ties between the two nations.
US Dollar Advances Amid Risk Aversion and Domestic Concerns
The US Dollar Index (DXY), which tracks the USD’s performance against a basket of major currencies, has been on the rise. It recovered from intraday losses and was trading around 98.70 at the time of this report. Despite this upward movement, the Greenback faced headwinds due to the ongoing US government shutdown, which continues to exert pressure on the broader economic forecast.
- The US federal government shutdown has now entered its third week, with no immediate resolution in sight. The impasse stems from a partisan dispute in the Senate concerning federal funding priorities. This shutdown now ranks as the third-longest funding lapse in modern US history.
- Federal Reserve officials have recently shared insights into potential monetary policy adjustments. St. Louis Fed President Alberto Musalem indicated on Friday that he could support further rate cuts if additional risks to the job market emerge and inflation remains contained. Musalem emphasized that the Fed should not adhere to a predetermined course but rather adopt a balanced approach.
- Conversely, US Federal Reserve Governor Christopher Waller stated on Thursday his support for another interest rate cut at the upcoming policy meeting this month.
- Meanwhile, the Fed’s newest governor,
US Federal Reserve Building Stephen Miran, reiterated his call for a more aggressive trajectory of rate cuts for 2025 than initially favored by some of his colleagues.
- Federal Reserve Chair Jerome Powell noted last week that the central bank is poised to implement another quarter-point interest rate reduction later this month, even though the government shutdown significantly obscures the economic data. Powell pointed to the sluggish pace of hiring, suggesting it might weaken further.
- Market sentiment, as reflected by the CME FedWatch Tool, now prices in a nearly 99% probability of a Fed rate cut in October and an equally high chance of another reduction in December.
- In China, the People’s Bank of China (PBOC) decided on Monday to maintain its one-year and five-year Loan Prime Rates (LPRs) at 3.00% and 3.50%, respectively.
- China’s Gross Domestic Product (GDP) expanded by 4.8% year-over-year in the third quarter of 2025, meeting expectations following a 5.2% growth in the second quarter. On a quarterly basis, the economy grew by 1.1%, surpassing the market consensus of 0.8%.
- Further economic indicators from China include annual June Retail Sales increasing by 3.0% in September, against an expected 2.9% and the prior month’s 3.4%. Industrial Production came in at 6.5%, exceeding the 5.0% estimate and August’s 5.2%.
- The Reserve Bank of Australia (RBA) is anticipated to enact a rate cut in November. This expectation is driven by a surprising rise in the Unemployment Rate, which climbed to 4.5% in September, marking a near four-year high. This figure exceeded market consensus and the previous month’s rate of 4.3%.
Australian Dollar Faces Technical Headwinds
The AUD/USD pair is currently trading near the 0.6510 level. Technical analysis of the daily chart indicates a persistent bearish bias, with the pair trading within a descending channel. The Relative Strength Index (RSI) for the 14-day period remains below the 50 mark, reinforcing this bearish outlook.
On the downside, the AUD/USD pair could find itself testing the lower boundary of the descending channel, which converges with the four-month low of 0.6414 recorded on August 21. A decisive break below this confluence support zone would further strengthen the bearish sentiment, potentially prompting the pair to probe the five-month low of 0.6372.
The immediate resistance for the AUD/USD pair appears at the nine-day Exponential Moving Average (EMA) of 0.6517. Further upward movement would encounter the 50-day EMA at 0.6546, followed by the upper boundary of the descending channel, which is situated around 0.6570.
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 US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.14% | 0.20% | 0.50% | 0.15% | 0.32% | 0.42% | 0.05% | |
| EUR | -0.14% | 0.05% | 0.35% | 0.00% | 0.18% | 0.27% | -0.10% | |
| GBP | -0.20% | -0.05% | 0.28% | -0.05% | 0.13% | 0.22% | -0.15% | |
| JPY | -0.50% | -0.35% | -0.28% | -0.35% | -0.17% | -0.08% | -0.44% | |
| CAD | -0.15% | -0.00% | 0.05% | 0.35% | 0.17% | 0.26% | -0.10% | |
| AUD | -0.32% | -0.18% | -0.13% | 0.17% | -0.17% | 0.09% | -0.29% | |
| NZD | -0.42% | -0.27% | -0.22% | 0.08% | -0.26% | -0.09% | -0.37% | |
| CHF | -0.05% | 0.10% | 0.15% | 0.44% | 0.10% | 0.29% | 0.37% |
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).
Expert Summary
The Australian Dollar faced pressure against the US Dollar, influenced by a mix of geopolitical trade developments and domestic economic indicators. While a new critical minerals agreement provided some underlying support, the pair’s trajectory remains weighed down by technical bearishness and broader market sentiment.
Federal Reserve rate cut expectations continue to be a significant factor for the USD, while the RBA’s potential November rate cut adds pressure on the AUD. Traders are closely monitoring upcoming economic data from both the US and China for further directional clues.
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