USD to AUD Rate Climbs Above 0.65 After PBOC LPR Decision in China
The USD to AUD rate remains volatile, driven by several factors, with AUD/USD falling below 0.65 last week but reversing and reclaiming that level again, as the USD retreats and risk assets benefit.
The AUD/USD has faced mixed movements amid shifting risk sentiment. Strengthened optimism over a rebound in the Chinese market, coupled with hawkish signals from the Reserve Bank of Australia (RBA), have helped the buyers after being pressured for two months, falling 5 cents lower to below 0.65.
AUD/USD Chart H4 – Gaining 1 Cent this Week
However, it managed to recover above that level yesterday. According to the RBA meeting minutes, monetary policy must remain restrictive as the central bank stays vigilant against upside inflation risks. Over the past two months, risky currencies like the AUD have been under sustained pressure, but this week has shown some recovery, with the AUD/USD gaining nearly 1 cent in the last two days.
China Tariffs Will Weigh on the AUD in 2025
RBA Governor Michele Bullock’s emphasis on maintaining restrictive interest rate levels until inflation is fully controlled bolstered the AUD’s rebound as well. However, concerns over a potential U.S.-China trade war may weigh on sentiment. President-elect Donald Trump’s suggestion of imposing tariffs as high as 60% on Chinese imports to protect American businesses could pose challenges for Australia, given its strong trade ties with China.
Adding to the mix, the People’s Bank of China (PBOC) held its Loan Prime Rates steady this morning after a 25-basis-point cut in October, which may also impact market dynamics. Maintaining upward momentum for the AUD/USD could prove challenging under these conditions.
People’s Bank of China Loan Price Rate
- 5-Year Loan Prime Rate:
- 3.60% (unchanged from the previous rate of 3.60%).
- In line with market expectations of 3.60%.
- 1-Year Loan Prime Rate:
- 3.10% (unchanged from the prior rate of 3.10%).
- Matches the anticipated rate of 3.10%.
AUD/USD Live Chart
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