What's Moving the Aussie Dollar This Week?

The Australian Dollar just hit its lowest point since late February against the US dollar, but don’t expect the pain to continue without a fight. Here’s what traders need to watch:

The Jobs Report Could Turn Things Around

Australia’s April employment data drops soon, and this could be the key. Markets are bracing for 12,000 new jobs—a clear slowdown from March’s 26,100. That said, recent economic data has been beating expectations consistently, and leading indicators suggest upside surprises are possible. If the jobs number comes in stronger than expected, it would challenge the RBA’s easing narrative and could spark a quick AUD bounce.

The RBA Minutes: Are Rate Cuts Here to Stay?

The real story isn’t just one interest rate cut—it’s whether the RBA is about to open the floodgates. Markets are already pricing in 25 basis points of cuts over the next year, with an 80% probability of 50 basis points total. When the RBA releases May’s meeting minutes, traders will be hunting for clues: was that record 1.75% cash rate a one-time shock absorber, or the start of a full easing cycle? The answer matters big-time for AUD positioning.

US CPI: The Real Risk Factor

Here’s where sentiment could turn ugly. US inflation headlines are expected to tick up to 1.1% year-on-year, but the spread between headline and core inflation is narrowing to three-month lows. That’s actually bullish for the Fed—it suggests temporary factors are fading and core price pressure is under control. If the data supports this narrative, expect a more hawkish Fed tone, which historically sends risk-sensitive currencies like the Aussie lower.

The Bottom Line

AUD is caught in a tug-of-war: supportive domestic data and RBA easing on one side, US inflation strength and global growth concerns on the other. Sentiment remains fragile, so any risk-off moves could drag the Aussie down regardless of local fundamentals.