The Australian Dollar (AUD) slipped for a second straight session on Tuesday, trading near 0.6480 against the US Dollar (USD). The AUD/USD pair remains subdued after US President Donald Trump threatened to impose a 200% tariff on Chinese goods if Beijing refuses to supply magnets to the United States, according to Reuters. As China is Australia’s largest trading partner, any disruption in the Chinese economy tends to weigh heavily on the Australian Dollar.
Additional headwinds emerged from the Reserve Bank of Australia’s (RBA) August meeting minutes. Policymakers indicated that further reductions in the cash rate are likely in the year ahead, with the pace of easing dependent on incoming data and global risks. While labor market conditions remain relatively tight and inflation above the midpoint target, board members saw arguments for both gradual and accelerated cuts.
On the US side, the Dollar has been dented by concerns over Federal Reserve independence after President Trump removed Fed Governor Lisa Cook. The decision allows Trump to appoint a replacement, raising fears of political influence over monetary policy. The US Dollar Index (DXY) is trading softer near 98.30, with investors now focused on upcoming Q2 GDP data and July’s PCE Price Index.
Broader Market Developments
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Trump threatened further tariffs and export restrictions targeting advanced technology and semiconductors in response to digital service taxes on US tech firms (Bloomberg).
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Fed Chair Jerome Powell maintained a cautious stance at Jackson Hole, citing both labor market risks and persistent inflation.
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Initial Jobless Claims rose to 235K, the highest in eight weeks, signaling softening employment conditions.
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PMI figures were mixed: Manufacturing PMI surged to 53.3 (vs. 49.5 expected), while Services PMI eased slightly but stayed above consensus.
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Rate expectations have shifted, with Fed funds futures showing a 74% chance of a September cut, down from 82% earlier (CME FedWatch).
Technical Outlook: AUD/USD
The pair is attempting to stabilize after recent losses, hovering just below the 0.6500 mark.
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Resistance levels:
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0.6494 (50-day EMA / confluence resistance)
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0.6568 (monthly high, August 14)
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0.6625 (nine-month high, July 24)
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Support levels:
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0.6477 (nine-day EMA)
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0.6414 (two-month low, August 21)
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0.6372 (three-month low, June 23 / channel support)
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A clear break above 0.6494 could confirm a bullish shift and open the door toward 0.6568, while sustained trading below 0.6477 risks a retest of recent lows near 0.6414.
