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AUD/USD turns upside down as US Dollar bounces back

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AUD/USD turns upside down as US Dollar bounces back

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New update 2025.11.14 20:36
AUD/USD turns upside down as US Dollar bounces back

update 2025.11.14 20:36

  • AUD/USD surrenders early gains and turns negative as the US Dollar recovers sharply.
  • Traders are divided about whether the Fed will cut interest rates in December.
  • The RBA is unlikely to cut interest rates again this year.

The AUD/USD pair gives up its early gains and declines 0.3% to near 0.6500 during the European trading session on Friday. The Aussie pair slumps as the US Dollar (USD) bounces back strongly.

At the time of writing, the US Dollar Index (DXY), which tracks the Greenback's value against six major currencies, recovers its intraday losses and rises to near 99.40.

US Dollar Price Today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the British Pound.

USD EUR GBP JPY CAD AUD NZD CHF
USD 0.17% 0.38% 0.11% 0.07% 0.33% -0.29% -0.13%
EUR -0.17% 0.21% -0.07% -0.10% 0.15% -0.46% -0.31%
GBP -0.38% -0.21% -0.28% -0.31% -0.04% -0.66% -0.51%
JPY -0.11% 0.07% 0.28% -0.00% 0.24% -0.39% -0.22%
CAD -0.07% 0.10% 0.31% 0.00% 0.25% -0.35% -0.20%
AUD -0.33% -0.15% 0.04% -0.24% -0.25% -0.61% -0.46%
NZD 0.29% 0.46% 0.66% 0.39% 0.35% 0.61% 0.16%
CHF 0.13% 0.31% 0.51% 0.22% 0.20% 0.46% -0.16%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

The US Dollar gains as traders doubt over whether the Federal Reserve (Fed) will cut interest rates again this year. According to the CME FedWatch tool, the probability of the Fed cutting interest rates by 25 basis points (bps) to 3.50%-3.75% in the December meeting has diminished to 50.7% from 63% seen on Thursday.

Fed dovish bets have receded as a slew of policymakers have stressed the need to bring inflation down, which is well above the central bank's target of 2%. "The Fed needs to maintain some amount of policy restriction to cool inflation," Cleveland Fed Bank President Beth Hammack said on Thursday.

Although investors have underpinned the US Dollar against the Australian Dollar (AUD), the latter has been broadly upbeat as speculation for the Reserve Bank of Australia (RBA) to cut interest rates again this year has eased, following strong Australian employment data for October and hotter-than-projected Q3 Consumer Price Index (CPI) data.

Australian Dollar FAQs

One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment - whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) - is also a factor, with risk-on positive for AUD.

The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.

China is Australia's largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.

Iron Ore is Australia's largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.

The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.

 


Date

Created

 : 2025.11.14

Update

Last updated

 : 2025.11.14

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