Australian Dollar gains ground ahead of RBA policy decision

• The Australian Dollar advances due to delaying of implementation of Trump tariffs.
• The Reserve Bank of Australia is expected to deliver a 25 basis points rate cut on Tuesday.
• President Trump has signed an executive order delaying the implementation of new tariffs from July to August 1.

The Australian Dollar (AUD) gains ground against the US Dollar (USD) on Tuesday, halting its three-day losing streak. The AUD/USD pair registered 1% losses in the previous session amid mounting expectations of a Reserve Bank of Australia (RBA) rate cut in July.

The Reserve Bank of Australia is going to hold a monetary policy meeting on Tuesday at 04:30 GMT and is expected to lower the Official Cash Rate (OCR) by 25 basis points (bps) to 3.60% from 3.85%. Traders will also await the RBA’s monetary policy statement, expressing the policymakers’ views on current economic conditions, and an outlook detailing what they expect for the upcoming months. Finally, RBA Governor Michele Bullock will offer a press conference.

The AUD/USD pair faced challenges amid renewed tariff concerns. However, the White House announced late Monday that US President Donald Trump has signed an executive order delaying the implementation of new tariffs from July to August 1, per Bloomberg.

The Financial Times reported that China is increasingly rerouting its exports through Southeast Asia in an effort to circumvent US tariffs imposed by the Trump administration. In May, direct shipments from China to the US fell by 43% in May, while China's overall exports climbed by 4.8%. This shift was marked by a 15% surge in exports to Southeast Asia and a 12% increase to the European Union (EU). However, the US trade agreement with Vietnam now includes a 40% tariff on trans-shipped goods to curb such practices. Any change in the Chinese economy could impact the AUD as China and Australia are close trading partners.

Australian Dollar advances as implementation of new US tariffs delays

• The US Dollar Index (DXY), which measures the value of the US Dollar against six major currencies, is maintaining position around 97.50 at the time of writing.
• US President Donald Trump posted on social media on Monday that “Any Country aligning themselves with the Anti-American policies of BRICS, will be charged an ADDITIONAL 10% Tariff. There will be no exceptions to this policy.”
• US Nonfarm Payrolls indicated that the US labor force grew by 147,000 jobs, surpassing the anticipated 110,000 in June. Additionally, the Unemployment Rate declined to 4.1% from 4.2%. Meanwhile, weekly Jobless Claims fell to 233,000, down from 237,000, reflecting a resilient US labor market.
• US ADP Employment Change fell for the first time in more than two years in June. The private-sector payrolls decreased by 33,000 in June after a downwardly revised 29,000 gain in May. This figure came in below the market consensus of 95,000.
• The Chinese Commerce Ministry said in a statement on Friday that “China and the US are stepping up efforts to implement the outcomes of the London framework.” The US has notified China of canceling restrictive measures against Chinese exports. China is reviewing applications for export licenses of controlled items under laws and regulations.
• China’s Caixin Services PMI declined to 50.6 in June from 51.1 in May, missing the market forecast of 51.0. China's Caixin Manufacturing Purchasing Managers' Index improved to 50.4 in June from 48.3 in May, according to the latest data released on Tuesday. The reading surpassed the market forecast of 49.0.
• ANZ Job Advertisements increased by 1.8% in June after a decline of 1.2% in May. The data presents the number of job advertisements in the major metropolitan newspapers and on the internet sites in Australia.

Australian Dollar moves above 0.6500, rebounds to ascending channel

The AUD/USD pair is trading around 0.6510 on Tuesday. The daily chart’s technical analysis indicated a renewing bullish sentiment as the pair has rebounded to the existing ascending channel pattern. The 14-day Relative Strength Index (RSI) is positioned on the 50 mark, suggesting a neutral bias. Further movements will offer a clear directional trend. The pair remains below the nine-day Exponential Moving Average (EMA), suggesting that short-term price momentum is weakening.

The AUD/USD pair may test the primary barrier at the nine-day EMA of 0.6533. A break above this level could improve the price momentum and support the pair to approach the eight-month high of 0.6590, recorded on July 1. Further advances would support the pair to explore the region around the upper boundary of the ascending channel around 0.6670.

On the downside, the AUD/USD pair may test the ascending channel’s lower boundary around 0.6500, followed by the 50-day EMA at 0.6472. A break below this crucial support zone would weaken the medium-term price momentum and open the doors for the pair to test the two-month low at 0.6372.

AUD/USD: Daily Chart