The Australian dollar held its ground on Wednesday, maintaining gains as markets digested comments from Reserve Bank of Australia (RBA) official Christopher Hauser and former U.S. President Donald Trump. Investors responded to a mix of monetary policy signals and global trade uncertainties, keeping the Aussie dollar supported despite broader market volatility.
Hauser reinforced the RBA’s cautious stance on interest rates, signaling that while inflation is easing, the central bank is not yet ready to declare victory. This reaffirmed expectations that the RBA will keep rates steady for longer, supporting the Australian dollar by reducing the likelihood of near-term rate cuts. With Australia’s economic outlook remaining stable, traders found confidence in the Aussie’s resilience.
Meanwhile, Trump’s latest remarks on trade policy and tariffs injected further uncertainty into global markets. Any potential U.S. tariff adjustments could disrupt global trade flows, impacting economies heavily reliant on exports, including Australia. While this could pose downside risks for the Australian dollar in the long run, short-term sentiment remained firm, with investors favoring risk-sensitive currencies amid improving market conditions.
AUD/USD 1-D Chart as of February 20, 2025 (Source: TradingView)
The US dollar, on the other hand, showed mixed performance, as traders assessed the Federal Reserve’s next steps. While expectations for rate cuts persist, recent data has suggested ongoing strength in the U.S. economy, keeping the greenback from weakening significantly. However, with the Fed maintaining a data-driven approach, uncertainty over policy shifts has prevented a major USD rally, allowing the Aussie to hold steady.
Commodity prices, particularly iron ore, also played a role in the Australian dollar’s performance. Despite some fluctuations, stable demand for key exports has provided underlying support for the currency. Traders are keeping an eye on China’s economic trajectory, as any improvement in Chinese demand could give the Aussie an additional lift.
For now, the Australian dollar remains firm, but risks remain tied to global trade policies and central bank decisions. As investors monitor further policy signals from both the RBA and Federal Reserve, AUD/USD’s next move will likely depend on shifts in risk sentiment and economic data releases.
