The Australian Dollar to US Dollar exchange rate has risen to about 0.6560, reaching a two-week high. This increase is due to a decline in the US Dollar, driven by heightened expectations for interest rate cuts by the Federal Reserve after the July US Consumer Price Index report. The US Dollar Index, which compares the dollar’s value against six major currencies, has fallen to around 97.60. The New Zealand Dollar has gained the most strength versus the US Dollar, which has dropped by 0.61% against the Australian Dollar.

Federal Reserve Rate Expectations

The likelihood of a Federal Reserve rate cut in September has climbed to 94%, up from 86% on Monday, according to CME FedWatch. Also, Australian employment data is set to be released on Thursday, predicting an addition of 25,000 jobs in July, compared to just 2,000 in June, with the unemployment rate expected to decrease from 4.3% to 4.2%. The unemployment rate, available from the Australian Bureau of Statistics, is key for gauging economic health and can influence the Reserve Bank of Australia’s decisions. Typically, a falling unemployment rate supports a stronger Australian Dollar. This data will be released on August 14, 2025. The Australian Dollar has climbed to its highest point in two weeks against the US Dollar, hovering around 0.6560. This trend arises as markets increasingly anticipate that the US Federal Reserve will lower interest rates next month. Eyes are now on the upcoming Australian employment figures. The US Dollar Index has dropped to 97.60, a level not often seen since early 2023, as the market processes the latest US inflation report for July, which showed a rate of 2.8%. This softer reading suggests that the Fed’s aggressive rate hikes from 2022 to 2024 are now behind us. This shift in outlook has caused expectations for a September rate cut to soar to 94%.

Australian Employment Report

With this momentum, we are looking into buying call options on the AUD/USD pair. These options would allow us to profit if the Australian Dollar continues to strengthen past its current level. This strategy is well-timed ahead of tomorrow’s Australian employment report, which could boost the exchange rate even further. The market anticipates that the Australian economy will add 25,000 jobs and that the unemployment rate will drop to 4.2%. If the actual figures exceed these predictions, we could see the exchange rate quickly approach the 0.6650 resistance level. However, if the jobs data falls short, we might see a reversal of the recent gains, which would lessen the value of our call options. The Reserve Bank of Australia has closely monitored the tight labor market during 2023 and 2024 when making decisions on interest rates. A strong jobs report tomorrow would signal ongoing economic strength, reducing the likelihood of the RBA considering rate cuts anytime soon. This difference in policy— with the US preparing to cut rates while Australia remains steady— has historically supported a stronger AUD/USD. Create your live VT Markets account and start trading now.

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