**Forex Markets Recap: AUD Strengthens as Asia Pacific Currencies Rise Amid USD Weakness**
*Original article credited to Mitrade, published on August 18, 2025.*
The Australian Dollar saw a strong performance in the Forex markets on Monday, August 18, 2025, as it not only recouped last week’s decline but also extended gains amid broad weakening of the US Dollar. Market sentiment shifted following economic signals that suggested slowing inflation in the United States, prompting a pullback in US Treasury yields and providing support to higher-yielding currencies like the AUD and NZD.
Meanwhile, the Japanese Yen remained relatively stable, holding onto recent gains against the USD after last week’s Japanese GDP data raised speculations that the Bank of Japan may further delay normalizing its policy rates. This created a mixed trading environment in the Asia Pacific currency space, with some currencies seeing stronger upward momentum than others.
This article expands upon Mitrade’s original report by incorporating insights from broader financial sources, including Bloomberg, Reuters, CNBC, and various Forex analytical feeds, to provide a comprehensive breakdown of recent Forex movements, underlying economic signals, and potential implications for traders.
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## Key Forex Market Drivers – August 18, 2025
Several significant economic and geopolitical factors influenced Forex trends on August 18:
### 1. US Dollar Weakness Continues
The US Dollar Index (DXY), which measures the USD against a basket of six major currencies, fell by 0.4% during early Asian trading on Monday, extending its Friday losses. The decline is largely attributed to:
– Cooling US inflation: The July Consumer Price Index (CPI) data released last Thursday showed a year-on-year increase of 3.2%, down from June’s 3.3%. Core CPI, which excludes food and energy prices, rose just 0.2% month-on-month. These figures suggest that the US Federal Reserve’s aggressive tightening over the past year may finally be exerting downward pressure on inflation.
– Reduced rate hike expectations: Market participants are increasingly pricing in the possibility that the Fed is done raising rates. The CME FedWatch Tool shows that the probability of another rate hike in 2025 has fallen below 10%.
– Decline in US Treasury yields: Following the inflation data, the yield on the 10-year US Treasury note dropped to 4.11%, which weakens support for the Greenback.
### 2. Strength in Asia-Pacific Currencies
With the USD losing ground, currencies in the Asia-Pacific region found renewed strength:
– The Australian Dollar (AUD/USD) rose to 0.6865 during the day, rebounding from last week’s low of 0.6740.
– The New Zealand Dollar (NZD/USD) followed suit, climbing above 0.6360 for the first time in two weeks.
– The South Korean Won and Singapore Dollar also saw moderate gains.
### 3. Australian Labor and Wage Data in Focus
Traders are now closely watching the upcoming Australian employment and wage data due later in the week. These data points could significantly influence the Reserve Bank of Australia’s monetary policy decisions.
Expectations driving market anticipation include:
– A solid employment print, potentially adding 25,000 to 30,000 jobs in July.
– Quarterly wage growth expected to come in at around 1.0%, signaling moderate inflationary pressure.
A combination of strong labor figures with restrained wage inflation could extend gains in the AUD, as it may suggest that Australia’s economy is growing without overheating—a relatively bullish signal for currency markets.
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## Forex Performance Highlights – Detailed Overview
Here’s a breakdown of how key currencies performed:
### Australian Dollar (AUD)
– **AUD/USD** rebounded above key technical levels, gaining 0.9% on Monday.
– Traders have noted that the Aussie has found support near its 50-day moving average.
– The currency was also aided by a rebound in commodity prices, particularly iron ore
Read more on USD/CAD trading.