Australian Dollar Rebounds as RBA Counters Strong USD

Key Moments

AUD/USD trades around 0.7070, up 0.33%, after briefly touching an almost eight-week low near 0.7024.
RBA Governor Michele Bullock reiterates the bank’s determination to curb elevated inflation and maintain price stability and full employment.
Stronger-than-expected US May Nonfarm Payrolls and shifting Fed rate expectations contrast with a pullback in the US Dollar Index toward 99.90.

Australian Dollar Climbs Off Multi-Week Lows

The Australian Dollar advanced on Monday, recovering part of its recent decline after briefly falling to its weakest level in nearly two months. AUD/USD traded around 0.7070 at the time of writing, a gain of 0.33% on the day, after earlier dipping toward 0.7024. The move higher came as market participants reassessed the implications of robust US labor data and evolving monetary policy expectations in both Australia and the United States.

RBA’s Hawkish Tone Underpins AUD

The Reserve Bank of Australia’s persistent hawkish stance continued to lend support to the Australian Dollar. Last week, RBA Governor Michele Bullock emphasized that the central bank remains firmly committed to bringing inflation back under control, noting that price pressures are still elevated. She also highlighted that the Board is prepared to take any necessary steps to fulfill its mandate of price stability and full employment.

This firm policy messaging has helped cap downside pressure on the AUD, even as the US Dollar remained broadly favored following the latest US employment report.

US Labor Strength Boosts Fed Tightening Expectations

On Friday, data showed that the United States economy added 172K Nonfarm Payrolls in May, exceeding market forecasts of 85K. The prior month’s figure was also revised higher. These outcomes strengthened expectations that the Federal Reserve could lean toward a more restrictive policy stance in the months ahead.

According to the CME FedWatch tool, traders now assign a 38% probability to a 25-basis-point rate increase at the September Fed meeting, up from 22% a week earlier, reflecting the market’s reassessment of the US rate outlook.

DXY Pullback and Easing Geopolitical Risks Aid Risk Currencies

Despite the stronger US data, the US Dollar Index retreated toward the 99.90 region after earlier reaching a two-month high near 100.20. This pullback provided some breathing room for AUD/USD.

Iran’s armed forces announced the conclusion of their military operations against Israel, while warning that any future Israeli actions could elicit a stronger response. At the same time, United States President Donald Trump stated that talks aimed at achieving an immediate ceasefire between the two sides were progressing. The apparent easing in geopolitical tensions reduced safe-haven demand and contributed to the Dollar’s decline, offering additional support to risk-sensitive currencies such as the Australian Dollar.

Intraday Performance of the Australian Dollar

The table below summarizes the Australian Dollar’s percentage changes against major peers on the day. The Australian Dollar showed its strongest performance against the US Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		-0.21%	-0.12%	-0.21%	-0.03%	-0.31%	-0.57%	-0.08%
EUR	0.21%		0.08%	-0.02%	0.17%	-0.12%	-0.35%	0.11%
GBP	0.12%	-0.08%		-0.11%	0.09%	-0.23%	-0.44%	0.02%
JPY	0.21%	0.02%	0.11%		0.16%	-0.14%	-0.34%	0.09%
CAD	0.03%	-0.17%	-0.09%	-0.16%		-0.30%	-0.51%	-0.08%
AUD	0.31%	0.12%	0.23%	0.14%	0.30%		-0.21%	0.24%
NZD	0.57%	0.35%	0.44%	0.34%	0.51%	0.21%		0.44%
CHF	0.08%	-0.11%	-0.02%	-0.09%	0.08%	-0.24%	-0.44%

The heat map should be read by selecting a base currency from the left-hand column and a quote currency from the top row. For instance, choosing the Australian Dollar as the base and moving horizontally to the US Dollar cell shows the percentage move for AUD (base) against USD (quote).