The Australian Dollar (AUD) gained momentum early Monday, reaching near 0.6280 against the US Dollar (USD) during the Asian session. The increase comes as the Reserve Bank of Australia (RBA) maintains high interest rates, and the Australian economy benefits from anticipated stimulus measures in China.
Analysts predict that the RBA will keep rates steady at its next meeting, following its decision to lower borrowing costs for the first time in four years this past February. Last week, RBA Assistant Governor Sarah Hunter reaffirmed the central bank’s cautious approach toward further rate cuts, noting that more evidence of inflation control is needed before making additional adjustments.
The AUD’s strength is further supported by new stimulus initiatives announced by the Chinese government. As China is Australia’s largest trading partner, these measures are seen as a positive catalyst for the Australian currency. The Chinese Communist Party’s central committee and state council recently unveiled plans to “vigorously boost consumption” by raising wages and easing financial burdens, aiming to revive consumer confidence and stimulate growth in the struggling Chinese economy.
Bank of America strategist Oliver Levingston noted, “We see a gradual recovery in the Australian dollar from the second quarter onward, driven initially by USD depreciation, followed by the delayed impact of China’s stimulus in the latter half of 2025.”
Meanwhile, trade policies introduced by former US President Donald Trump have fueled concerns about a US economic slowdown, contributing to a weaker USD. Investors are also awaiting the preliminary results of the US S&P Global Manufacturing Purchasing Managers Index (PMI) for March. A surprise upside in the PMI reading could provide a boost to the USD and limit further gains for the AUD/USD pair.
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