Australian Dollar Holds at 7-Week Top

The Australian dollar held above $0.70, sitting at a seven-week high, supported by improving global risk appetite, broad US dollar weakness, and strong domestic economic data. Australia's private sector gained further momentum in July, with the composite PMI revised up to 53.2, the highest since January, led by a six-month high in services activity and a return to manufacturing growth. Stronger-than-expected household spending also reinforced signs of resilient domestic demand, although markets have priced out almost any chance of a rate hike from the Reserve Bank at its policy meeting next week. Elsewhere, optimism that a deal to reopen the Strait of Hormuz is nearing completion has eased fears of major supply disruptions, lifting Australian equities to a record high. Meanwhile, the greenback remained under pressure following recent coordinated support for the Japanese yen by US and Japanese authorities, which has spilled over into broader Asian currencies.

AUDUSD increased to 0.71, the highest since June 2026. Over the past 4 weeks, Australian Dollar US Dollar gained 1.33%, and in the last 12 months, it increased 8.44%.

The Australian dollar traded around $0.70, near multi-week highs as stronger-than-expected household spending reinforced signs of resilient domestic demand ahead of the Reserve Bank’s monetary policy meeting next week. Household spending rose 0.8% in June, well above forecasts of 0.2%, driven by another increase in discretionary spending, while annual growth accelerated to 6.0%, also exceeding expectations. The data supported the central bank’s view that consumer activity remains firm despite weak sentiment, although recent softer inflation and a cooling housing market have strengthened expectations that the central bank will leave its 4.35% cash rate unchanged next week. Markets are also pricing little chance of a rate hike in September, while assigning roughly a 50% probability of a move in November if third-quarter inflation proves stronger than expected. Investors now await upcoming final PMI figures and trade balance data this week for further clues on the economy’s health.