// Breaking News //

The Australian dollar (AUD) has skyrocketed against the US dollar (USD), hitting 0.658—its highest level since November 2024! Meanwhile, the USD is suffering its worst first-half performance since 1973.

Key Figures (as of July 2, 2025):

AUD/USD: 0.6578 (peaked at 0.6584 intraday)

AUD/CNY: 4.7105

ASX 200: Up 10% in FY2025, continuing its rally into the new fiscal year

 

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#1: Why Is the AUD Surging?

1. USD Collapse, Not AUD Strength

The AUD’s rally is not driven by Australia’s economy but by a systemic USD sell-off.

The US Dollar Index (DXY) has plunged 10.8% in H1 2025—its worst performance in 52 years 12.

Analysts note that while AUD/USD is up 5.4% this quarter, it has weakened against EUR, GBP, and NZD, indicating USD-specific weakness 10.

2. Market Sentiment & Risk Appetite

Kristina Clifton (CBA):

"AUD broke past the 0.6550 resistance due to USD weakness and US equity gains."

If Trump announces new trade deals, AUD could test 0.6700; if talks sour, a pullback to 0.6428 is likely 10.

Sean Callow (InTouch Capital Markets):

"This rally is purely USD-driven—traders remain bearish on AUD itself."

 

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#2: Why Is the USD Crashing?

1. US Debt & Policy Uncertainty

Investors are dumping US Treasuries over debt sustainability fears, dragging the USD down 12.

Trump’s threat to replace Fed Chair Powell with a dovish successor has added to dollar weakness 10.

2. Trade War & Global Distrust

Steve Englander (Standard Chartered):

"The USD slump reflects global skepticism toward US policies—tariffs, fiscal instability, and political chaos."

David Morrison (Trade Nation):

"Trump’s trade threats, government dysfunction, and bond market turmoil are killing USD demand."

3. Fed Rate Cut Bets

Weak US inflation data has boosted expectations of a September Fed rate cut, further pressuring the USD

 

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Outlook: What’s Next for AUD?

✅ Bullish Factors:

Commodity Prices: Rising iron ore & coal exports could support AUD if China’s demand holds.

RBA Policy: If the RBA delays rate cuts, AUD may gain against low-yield currencies.

 

⚠️ Risks:

Trump’s Trade Policies: New tariffs (e.g., on China) could trigger AUD volatility.

Global Recession Fears: A slowdown may hurt risk-sensitive AUD 

 

 

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Final Takeaway

This AUD rally is not an Aussie economic victory—it’s a USD collapse story. Traders should watch:
�� US political developments (Fed chair drama, tariffs)
�� Commodity markets (China’s iron ore imports)
�� RBA vs. Fed rate paths

"The AUD’s fate now hinges more on Washington than Sydney." — Market Analyst