The Australian dollar saw increased volatility on Thursday as investors reacted to U.S. President Donald Trump’s congressional speech, which reignited uncertainty over trade policy and global economic stability. Traders responded with cautious positioning, leading to fluctuations in risk-sensitive currencies like the Aussie.
Markets had been anticipating Trump’s remarks for potential insights into U.S. fiscal and trade policies, but the speech provided little clarity, leaving investors wary. The U.S. dollar saw mixed movement, initially weakening as markets digested the president’s rhetoric before regaining some strength. This pushed the AUD/USD pair into a choppy trading range.
Adding to the Aussie’s turbulence, commodity prices remained under pressure, with iron ore—Australia’s key export—experiencing a slight pullback. Concerns over slowing global demand and geopolitical risks have weighed on commodity-linked currencies, contributing to the Australian dollar’s struggle to find direction.
AUD/USD 1-D Chart as of March 05, 2025 (Source: TradingView)
Meanwhile, expectations surrounding the Federal Reserve’s rate outlook remain a key factor in the Aussie’s performance. While U.S. inflation trends and labor market data continue to influence the Fed’s stance, any signals of prolonged higher rates could strengthen the greenback further, keeping the Australian dollar under pressure.
Domestically, traders are also closely watching the Reserve Bank of Australia (RBA) for any shifts in policy expectations. While the central bank has maintained a cautious tone, any dovish signals could exacerbate downside risks for the Australian dollar, especially if global risk appetite continues to fade.
For now, the Aussie remains highly reactive to geopolitical and economic headlines, with Trump’s speech adding another layer of uncertainty. Investors will continue monitoring U.S. policy developments, commodity market trends, and central bank signals to gauge the Australian dollar’s next move in an increasingly unpredictable market environment.
