AUD/USD drifts lower amid cautious RBA, global trade uncertainty

• AUD/USD retreats to 0.6460 as Aussie loses ground after Monday's rally.
• RBA minutes reveal that the board debated a 50 bps interest rate cut but opted for a 25 bps cut to preserve predictability.
• Focus shifts to US JOLTS Job Openings due later in the day, Wednesday's Australian GDP and Friday's NFP for fresh cues.

The Australian Dollar (AUD) slips against the US Dollar (USD) on Tuesday, retreating from recent highs to 0.6460 as traders react to the Reserve Bank of Australia's (RBA) cautious tone and softer-than-expected current account figures. AUD/USD is hovering near 0.6458 at the time of writing, trimming Monday's solid 1% rally. While the pair remains confined to a narrow range since late April, repeated rejections near the 0.6500 psychological barrier continue to cap the upside. Meanwhile, the US Dollar Index (DXY), which tracks the value of the Greenback against a basket of six major currencies, is staging a mild rebound after Monday's dip, holding near a six-week low around 98.95, adding to the downside pressure on the Aussie.

The minutes from the Reserve Bank of Australia's (RBA) May meeting, released earlier, revealed that the board considered a 50-basis-point (bps) interest rate cut but ultimately opted for a more measured 25-bps reduction, lowering the cash rate to 3.85% from 4.10%. This decision was made to maintain policy predictability amid heightened global uncertainties around US tariffs.

Speaking in Brisbane on Tuesday, RBA Assistant Governor Sarah Hunter struck a cautious tone, warning that rising global trade uncertainty could weigh heavily on investment, output, and employment. "The unpredictability and unprecedented nature of the current situation makes it hard to be precise on the size of the impact," Hunter noted, adding that the central bank will be closely monitoring how these developments unfold in order to adjust its policy stance accordingly.

The RBA also noted that while inflation had returned to the target range of 2.9% YoY and is projected to ease further to 2.6% by the end of 2025, it is still too early to shift to an expansionary policy stance. According to a Reuters report, markets are currently pricing in a roughly 70% chance of another rate cut in July, although some analysts believe the central bank may hold off until second-quarter inflation data provides clearer direction.

Looking ahead, traders will focus on a series of key macroeconomic releases. Australia's Q1 GDP report, Industry Index and the S&P Global Composite and Services PMIs are all due on Wednesday and could offer fresh direction for the Aussie. On the US side, the JOLTS Job Openings data to be published later on Tuesday, and the highly anticipated Friday's Nonfarm Payrolls (NFP) report will be closely watched for further insight into the labor market and the Federal Reserve's (Fed) next moves.