19/03/25

33

The Australian Dollar is holding steady as market participants remain cautious in anticipation of the Federal Reserve’s upcoming interest rate decision. Following recent losses, the AUD/USD pair is stabilizing, buoyed by a resilient US Dollar which is supported by stable US yields. Traders expect the Fed to maintain current interest rates, given ongoing concerns about inflation combined with uncertainty in the economic landscape.

Recent economic indicators highlight Australia’s underlying strength amidst global challenges. Australia’s Westpac Leading Index reported a rise to 0.8% in February from 0.6% in January, signaling resilience in domestic factors, although the effects of external tariff pressures are starting to manifest. In a recent address, Australia’s Treasurer criticized the previous US administration’s trade strategies for being damaging and unproductive. He underscored the importance of focusing on economic resilience in Australia rather than engaging in retaliatory measures.

The Reserve Bank of Australia is taking a cautious approach regarding potential rate cuts. The RBA’s recent statements have indicated a conservative stance, primarily awaiting further developments in US monetary policies that could affect inflation expectations in Australia. The US Dollar Index is currently holding relatively strong, yet the currency faces challenges due to recent weak economic data and renewed tariff threats from the US.

Retail sales in the US showed a modest increase of 0.2% month-over-month in February, falling short of expectations and following a prior decline. This underperformance raises questions around consumer spending and economic momentum.

International relationships continue to be tense, especially between the US and Russia, despite a recent agreement to pause strikes on energy infrastructure in Ukraine. Meanwhile, Australia’s Prime Minister has ruled out implementing reciprocal tariffs on the US, emphasizing the detrimental impact such measures would have on Australian consumers.

Additionally, China has unveiled a new initiative designed to stimulate consumption and bolster market sentiment by increasing wages and encouraging spending. Positive developments from this plan could lend additional support to the Australian Dollar, considering China’s significant role as a trading partner.

Currently, the AUD/USD pair is trading at around 0.6360, showing a positive trend within its ascending channel. A potential challenge remains at the three-month high of 0.6408, last reached in late February. Momentum indicators suggest persistent strength, but any dip below critical support levels could open the door for further downward moves, calling for close monitoring of market conditions.