Australian Dollar extends gains as PM Albanese secures a second three-year term

The Australian Dollar strengthened after Prime Minister Anthony Albanese secured a second three-year term in the 2025 Federal Election. Australia’s Judo Bank Composite PMI came in at 51.0 for April, marking the seventh consecutive month of expansion. President Trump confirmed he does not intend to replace Fed Chair Powell before his term concludes in May 2026. The Australian Dollar (AUD) is extending its gains against the US Dollar (USD) for a second consecutive session on Monday. The AUD/USD pair is rising after Australian Prime Minister Anthony Albanese secured a second three-year term in the 2025 Federal Election, achieving significant gains in Saturday’s results. Labor Party leader Albanese has claimed a majority in parliament, with over 45% of the votes counted. His re-election marks the first time in decades that a leader has won back-to-back terms, defeating opposition leader Peter Dutton of the center-right Liberal-National coalition. Economic data also supported the AUD, with Australia’s Judo Bank Composite Purchasing Managers Index (PMI) posting a reading of 51.0 in April. This indicates continued expansion for a seventh straight month, although the pace slowed from 51.6 in March. The Services PMI also came in at 51.0, marking fifteen consecutive months of growth. In external developments, China’s Commerce Ministry announced Friday that Beijing is considering a US offer to resume trade talks. This follows recent comments by US President Donald Trump, who claimed negotiations were already in progress. However, Trump added that he has no plans to speak with Chinese President Xi Jinping this week. Any signs of rising tensions between the US and China could negatively impact the AUD, given Australia’s strong trade ties with China. Meanwhile, US companies planning to shift production from China to domestic facilities may need to reassess, following Trump’s latest comments on tariffs. Speaking over the weekend, Trump acknowledged the potential impact of high tariffs: “At some point, I’m going to lower them, because otherwise, you could never do business with them, and they want to do business very much.” Australian Dollar appreciates as US Dollar struggles ahead of ISM Services PMI The US Dollar Index (DXY), which tracks the USD against a basket of six major currencies, is losing ground for the second successive day, trading near 99.80 at the time of writing. Later in the day, traders will watch for the US ISM Services PMI for further direction. President Trump has confirmed that he will not seek to replace Federal Reserve Chair Jerome Powell before his term ends in May 2026. Although Trump criticized Powell, calling him “a total stiff,” he maintained that interest rates should eventually be lowered. In other policy moves, Trump announced plans to instruct the US Trade Representative and the Commerce Department to initiate the process of imposing a 100% tariff on foreign-produced films. The US Nonfarm Payrolls (NFP) report for April showed a stronger-than-expected increase of 177,000 jobs, following a revised gain of 185,000 in March. This exceeded the market forecast of 130,000. The unemployment rate remained unchanged at 4.2%, while average hourly earnings rose 3.8% year-over-year, matching the previous month’s figure. US Treasury Secretary Janet Yellen cautioned that Trump’s tariffs could have a “tremendously adverse” impact on the US economy. Treasury Secretary Scott Bessent noted that the inverted yield curve, with two-year yields below the federal funds rate, supports the case for Federal Reserve rate cuts. The Australian Bureau of Statistics reported on Thursday a trade surplus of AUD 6.9 billion for March, significantly surpassing expectations of AUD 3.13 billion and the revised February figure of AUD 2.85 billion (down from AUD 2.97 billion). The strong surplus was driven by a 7.6% rise in exports and a 2.2% decline in imports for the month. Australia’s Retail Sales on Friday—a key indicator of consumer spending—increased by 0.3% month-over-month in March, up from a 0.8% rise in February (revised from 0.2%), according to data released Friday by the Australian Bureau of Statistics (ABS). However, the figure fell short of market expectations, which had forecast a 0.4% gain. Australian Treasurer Jim Chalmers noted that markets still anticipate further interest rate cuts. “The market expects more interest rate cuts after inflation figures,” he stated, adding that there’s “nothing in these numbers that would substantially alter market expectations.” Inflationary pressures in Australia in early 2025 have weakened expectations of further monetary easing by the Reserve Bank of Australia (RBA). However, markets anticipate a 25-basis-point rate cut in May, as policymakers prepare for possible economic fallout from the recently introduced US tariffs. According to Bloomberg, China is considering renewed trade talks with the US. The Chinese Commerce Ministry noted that Washington has reached out to express interest in resuming negotiations. However, China is reportedly conducting an internal assessment and maintains that the US should correct its tariff-related actions, which it views as the unilateral trigger for the ongoing trade dispute. Australian Dollar rises toward 0.6500 near five-month highs The AUD/USD pair is trading around 0.6460 on Thursday, maintaining a bullish bias on the daily chart. The pair continues to hold above the nine-day Exponential Moving Average (EMA), while the 14-day Relative Strength Index (RSI) remains comfortably above 50, both suggesting sustained upward momentum. On the upside, the AUD/USD pair could approach the five-month high at 0.6515, followed by the psychological level of 0.6600. The AUD/USD pair may find initial support at the nine-day EMA at 0.6408, followed by the 50-day EMA at 0.6326. A breach below these levels could weaken the bullish outlook and may expose the pair to 0.5914, the lowest since March 2020. AUD/USD: Daily Chart Australian Dollar PRICE Today The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the strongest against the Canadian Dollar. The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote). Australian Dollar FAQs One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD. The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive. China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs. Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD. The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative. Source: https://www.fxstreet.com/news/australian-dollar-extends-gains-as-pm-albanese-secures-a-second-three-year-term-202505050228