The Australian dollar (AUD) underperformed its major currency pairs during Wednesday’s European trading session, falling 0.25% to nearly 0.7010 against the US dollar (USD). Antipodes are facing selling pressure as the latest reports from various banks signal that fears of further interest rate increases by the Reserve Bank of Australia (RBA) have subsided.
Today’s Australian dollar price
The table below shows the current percentage change of the Australian Dollar (AUD) against the major listed currencies. The Australian dollar was the weakest against the Canadian dollar.
| USD | EUR | GBP | JPY | BOOR | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.08% | 0.00% | 0.02% | -0.12% | 0.35% | 0.13% | 0.08% | |
| EUR | 0.08% | 0.05% | 0.09% | -0.06% | 0.36% | 0.21% | 0.16% | |
| GBP | -0.00% | -0.05% | 0.04% | -0.11% | 0.32% | 0.16% | 0.09% | |
| JPY | -0.02% | -0.09% | -0.04% | -0.15% | 0.29% | 0.10% | 0.03% | |
| BOOR | 0.12% | 0.06% | 0.11% | 0.15% | 0.44% | 0.25% | 0.18% | |
| AUD | -0.35% | -0.36% | -0.32% | -0.29% | -0.44% | -0.18% | -0.24% | |
| NZD | -0.13% | -0.21% | -0.16% | -0.10% | -0.25% | 0.18% | -0.07% | |
| CHF | -0.08% | -0.16% | -0.09% | -0.03% | -0.18% | 0.24% | 0.07% |
The heat map shows the percentage changes of the major currencies relative to each other. The base currency is selected from the left column and the quote currency from the top row. For example, if you select Australian Dollar from the left column and move along the horizontal line to US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).
So far this year, the RBA has already raised its official cash rate (OCR) by 75 basis points (bps) to 4.35%.
Analysts at National Australia Bank (NAB) said: “The next move in interest rates is likely, but the timing is uncertain,” citing uncertainty over economic activity and inflation, news.com.au reports.
Meanwhile, Commonwealth Bank economists said interest rates would remain at 4.35% until May 2027, when the cycle of cuts would begin.
Australian Consumer Price Index (CPI) figures for April also came in lower at 4.2% year-on-year (y-o-y) than the estimate of 4.4% and the March reading of 4.6%.
This represents a stark change from the RBA’s 80% chance of increasing interest rates at its August 2026 meeting, Reuters reported after the publication of the 2026 budget, in which Australian Treasurer Jim Chalmers reduced the tax rate for citizens with incomes between $18,201 and $45,000 to 15% from 16% from July 2026. From July 2026, this rate will be further reduced to 14/2027.
For more information on the RBA’s monetary policy outlook, investors will focus on the June monetary policy announcement on Tuesday, in which the central bank is expected to leave OCR constant at 4.35%.
In European trading, the US Dollar Index (DXY) is trading below near 99.90 ahead of US Consumer Price Index (CPI) data for May, due at 12:30 GMT.
RBA FAQs
The Reserve Bank of Australia (RBA) sets interest rates and manages Australia’s monetary policy. Decisions are taken by the Board of Governors at 11 meetings a year and, when necessary, at extraordinary ad hoc meetings. The RBA’s primary mandate is to maintain price stability, which means an inflation rate of 2-3%, but also to “…contribute to currency stability, full employment and the economic prosperity and well-being of the Australian people.” The main tool to achieve this goal is to raise or lower interest rates. Relatively high interest rates will strengthen the Australian dollar (AUD) and vice versa. Other RBA tools include quantitative easing and tightening.
While inflation has always traditionally been considered a negative factor for currencies because it generally lowers the value of money, in state-of-the-art times the opposite has been true with the relaxation of cross-border capital controls. Moderately higher inflation is currently prompting central banks to raise interest rates, which in turn is attracting more capital inflows from global investors looking for a lucrative place to stash their money. This increases demand for the local currency, which in the case of Australia is the Australian dollar.
Macroeconomic data measures the health of an economy and can influence the value of its currency. Investors prefer to invest their capital in economies that are safe and sound and growing rather than uncertain and shrinking. Greater capital inflow increases aggregate demand and the value of the national currency. Classic indicators such as GDP, PMIs for industry and services, employment and consumer sentiment surveys can influence the AUD. A forceful economy may prompt the Reserve Bank of Australia to augment interest rates, also supporting the AUD.
Quantitative easing (QE) is a tool used in extreme situations where lowering interest rates is not enough to restore the flow of credit in the economy. QE is the process by which the Reserve Bank of Australia (RBA) prints Australian dollars (AUD) to buy assets – usually government or corporate bonds – from financial institutions, thereby providing them with much-needed liquidity. QE usually results in a weaker AUD.
Quantitative tightening (QT) is the inverse of QE. It is undertaken after quantitative easing, when economic recovery is underway and inflation begins to rise. While under QE the Reserve Bank of Australia (RBA) buys government and corporate bonds from financial institutions to provide them with liquidity, under QT the RBA stops buying more assets and stops reinvesting maturing capital into bonds it already holds. This would be positive (or bullish) for the Australian dollar.
