Australian Dollar holds losses as US Dollar receives support from safe-haven demand
- The Australian Dollar loses ground as the US Dollar gains ground amid rising geopolitical tensions.
- RBA Assistant Governor Sarah Hunter emphasized that the central bank will be cautious about future rate cuts.
- US economic data added to investor worries, with February’s Retail Sales rising less than expected.
The Australian Dollar (AUD) depreciates as the US Dollar recovers its losses amid rising geopolitical tensions in the Middle East. The US reaffirmed its commitment to striking Yemen’s Houthis until they halt attacks on Red Sea shipping, further unsettling markets. US President Donald Trump warned on Monday that he would hold Iran accountable for any attacks by the Houthi group it supports in Yemen. Trump administration has since expanded the largest US military operation in the Middle East since Trump returned to office.
However, the AUD/USD pair strengthened as the US Dollar (USD) weakened amid rising trade tensions and growing economic concerns in the United States (US).
Reserve Bank of Australia (RBA) Assistant Governor (Economic) Sarah Hunter stated late Monday that the central bank will take a cautious approach to rate cuts. The February statement indicated that the RBA board is more conservative than market expectations regarding further easing. Hunter also emphasized monitoring US policy decisions and their impact on inflation in Australia.
The AUD may face pressure as US President Donald Trump reaffirmed plans to impose reciprocal and sectoral tariffs on April 2. Trump confirmed that there would be no exemptions for steel and aluminum and mentioned that reciprocal tariffs on specific countries would be implemented alongside auto duties.
The Aussie Dollar found support after China introduced a special action plan over the weekend aimed at boosting consumption, and improving market sentiment across the region. The plan includes measures to raise wages, encourage household spending, and stabilize stock and real estate markets. Any positive developments related to the Chinese stimulus plan could further support the AUD, given China’s role as a key trading partner for Australia.
Australian Dollar could appreciate due to rising investors’ uncertainty on US Dollar
- The US Dollar Index (DXY), which measures the USD against six major currencies, is trading around 103.50 at the time of writing. The US Dollar struggles as disappointing US economic data and Trump’s tariff threats fuel uncertainty among investors. February’s US Retail Sales rose less than expected, raising concerns about a potential slowdown in consumer spending. Markets widely anticipate that the Federal Reserve (Fed) will maintain its current policy stance when it concludes its two-day meeting on Wednesday.
- The US Census Bureau reported on Monday that Retail Sales increased by 0.2% month-over-month in February, falling short of the market expectation of 0.7%. This followed a revised decline of -1.2% in January (previously reported as -0.9%). On a yearly basis, Retail Sales grew by 3.1%, down from the revised 3.9% in January (previously 4.2%).
- The University of Michigan (UoM) reported a decline in its preliminary Consumer Sentiment Index for March on Friday, falling to 57.9—the lowest since November 2022—from the previous reading of 64.7. This figure also came in below the consensus estimate of 63.1. Meanwhile, the UoM five-year Consumer Inflation Expectation jumped to 3.9% in March, compared to 3.5% in February.
- US President Donald Trump stated that he would speak with Russia’s Vladimir Putin early Tuesday regarding a potential resolution to the Ukraine war, with territorial concessions by Kyiv and control of the Zaporizhzhia nuclear power plant expected to be key topics, according to Reuters. Additionally, Semafor reports that the Trump administration is considering recognizing Ukraine’s Crimea region as Russian territory as part of a possible future agreement to end the conflict.
- US Treasury Secretary Scott Bessent said late Sunday that he was not concerned about the stock market despite multiple declines triggered by Trump’s tariff threats. “I’ve been in the investment business for 35 years, and I can tell you that corrections are healthy. They’re normal. What’s not healthy is a market that only moves straight up,” Bessent stated.
- US President Donald Trump’s decision to uphold a 25% tariff on Australian aluminum and steel exports, valued at nearly $1 billion. This move adds strain to Australia’s trade outlook, impacting major exports.
- Australian Prime Minister Anthony Albanese confirmed that Australia will not impose reciprocal tariffs on the US, emphasizing that retaliatory measures would only raise costs for Australian consumers and fuel inflation.
- China’s retail sales grew by 4.0% year-over-year in January-February, improving from December’s 3.7% increase. Meanwhile, industrial production rose 5.9% YoY during the same period, exceeding the 5.3% forecast but slightly lower than the previous reading of 6.2%.
Technical Analysis: Australian Dollar could test 0.6400 barrier near three-month highs
The AUD/USD pair is hovering around 0.6380 on Tuesday, maintaining a bullish outlook as it continues to rise within the ascending channel on the daily chart. The 14-day Relative Strength Index (RSI) remains above 50, reinforcing the bullish momentum.
The pair may attempt to retest its three-month high of 0.6408, last reached on February 21. A breakout above this level would strengthen the bullish bias, potentially pushing the AUD/USD pair toward the upper boundary of the ascending channel near 0.6480.
On the downside, initial support is at the nine-day Exponential Moving Average (EMA) of 0.6330, followed by the lower boundary of the ascending channel at 0.6320 and the 50-day EMA at 0.6311. A decisive break below this critical support zone could weaken the bullish outlook, exposing the AUD/USD pair to downward pressure toward the six-week low of 0.6187, recorded on March 5.
AUD/USD: Daily Chart
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 | 0.12% | 0.15% | 0.33% | 0.12% | 0.24% | 0.11% | 0.03% | |
| EUR | -0.12% | 0.02% | 0.21% | -0.01% | 0.11% | -0.02% | -0.10% | |
| GBP | -0.15% | -0.02% | 0.19% | -0.03% | 0.10% | -0.03% | -0.11% | |
| JPY | -0.33% | -0.21% | -0.19% | -0.23% | -0.10% | -0.26% | -0.31% | |
| CAD | -0.12% | 0.00% | 0.03% | 0.23% | 0.13% | -0.00% | -0.09% | |
| AUD | -0.24% | -0.11% | -0.10% | 0.10% | -0.13% | -0.13% | -0.21% | |
| NZD | -0.11% | 0.02% | 0.03% | 0.26% | 0.00% | 0.13% | -0.07% | |
| CHF | -0.03% | 0.10% | 0.11% | 0.31% | 0.09% | 0.21% | 0.07% |
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).
Risk sentiment FAQs
In the world of financial jargon the two widely used terms “risk-on” and “risk off” refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.