**Australian Dollar Forecast: AUD/USD Holds Above June Low**
*Adapted and expanded from research by Matt Weller*
## Introduction
The Australian dollar (AUD) has shown resilience in recent trading sessions, holding above its June lows against the US dollar (USD). Investors and traders are closely watching the AUD/USD pair as concerns about global economic growth, central bank policy divergence, and fluctuating commodity prices continue to weigh on risk sentiment and shape currency movements. This detailed analysis explores recent developments, technical patterns, key economic drivers, and potential scenarios that could impact the AUD/USD rate in coming weeks.
## Overview: Recent Performance of AUD/USD
The AUD/USD pair is often seen as a barometer for risk sentiment and global commodity demand, particularly from China. In the past quarter, the Australian dollar has struggled to break out from a downtrend, with its value pressured by both internal and external factors.
– In June, the AUD/USD nearly breached the psychological support near 0.6580, a level it last touched earlier in the year.
– As of early July, the currency pair managed to stay above this low, buoyed by fluctuating risk sentiment and shifting expectations around the monetary policy stances of the Reserve Bank of Australia (RBA) and the US Federal Reserve (Fed).
– The pair trades within a range, reflecting ongoing uncertainty and a lack of clear direction in economic data.
## Key Drivers Affecting the Australian Dollar
### 1. Central Bank Divergence
The differing approaches of the RBA and the Fed play a critical role in setting the tone for the AUD/USD exchange rate.
– The RBA has adopted a more cautious stance in recent months, signaling patience regarding interest rate hikes despite persistent domestic inflationary pressure.
– In contrast, the Fed has hinted at the possibility of additional rate increases, keeping the US dollar supported amid expectations of tighter monetary conditions.
#### Impact:
A widening policy divergence, where the Fed maintains a hawkish posture while the RBA remains dovish, generally favors USD strength over AUD.
### 2. Commodity Prices and Terms of Trade
Australia’s economy is heavily reliant on commodity exports, especially iron ore, coal, and natural gas.
– In 2024, iron ore prices have been volatile, reflecting uncertainty over Chinese demand.
– Commodity prices often correlate with the AUD, and any sustained rally or drop in these prices tends to impact the currency.
– Recent OPEC+ production policies and geopolitical developments continue to introduce volatility in energy markets, indirectly affecting Australia as a key exporter.
#### Impact:
Sustained weakness in commodities can lead to lower terms of trade, pressuring the AUD.
### 3. Chinese Economic Data
China is Australia’s largest trading partner, and its economic health significantly influences the Australian dollar.
– Any sign of slower growth or reduced infrastructure spending in China directly affects demand for Australian exports.
– Recent Chinese data have been mixed, with some indicators hinting at an economic rebound while others, such as property
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