The Australian Dollar was the only currency that appreciated more than 2% against the USD in the first half of September. Sentiment has improved significantly after AUD/USD started rising above the 0.66 resistance level over the past week, hitting fresh highs for the year. Despite delivering a 25-bps rate cut to 3.60% on August 12, the Reserve Bank of Australia signalled that its easing cycle could be nearing completion, with one or two more cuts expected. Since then, real GDP has been stronger than expected in 2Q25, driven by resilient household spending. The trade surplus also widened again on exports expanding again in June-July. Not surprisingly, the futures market does not expect the RBA to lower rates at its upcoming meeting on 30 September, contrasting sharply with the increased expectations for more Fed cuts into 2026.
AUD/USD still needs to take out another resistance level around 0.67 before extending its rise to 0.68. On September 18, the Bureau of Statistics is expected to show the jobs recovery in July extending into August. Next week, CPI inflation will be closely watched after its rebound to 2.8% YoY in July from 1.9% in June. On September 22, RBA Governor Michele Bullock is scheduled to deliver her semi-annual testimony before the House of Representatives Standing Committee on Economics. Her remarks will be important in determining if the RBA is closer to the end of its easing cycle. While the AUD’s positivity has spilled over into the NZD, we see scope for CAD to play catch-up this week. The Bank of Canada could also signal that it is near the end of its easing cycle at its September 19 meeting. The expected 25 bps cut to 2.50% will bring its policy rate close to the floor of its neutral range of 2.25-3.25%.
Quote of the Day
“Don't worry about the world coming to an end today. It is already tomorrow in Australia.”
Charles M. Schulz
September 16 in history
Papua New Guinea gained independence from Australia in 1975.
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