AUDUSD
Fundamental Analysis of AUD/USD (February 2025)
This analysis includes updated macroeconomic indicators, geopolitical factors, data from the Commitment of Traders (COT) report, possible scenarios, and a favorable scenario based on existing economic data.
1. Macroeconomic Indicators and Monetary Policy
Australia
• GDP and Economic Growth:
• The Australian economy has shown modest growth in recent quarters, influenced by global demand for raw materials and economic conditions in China, Australia’s main trading partner.
• Inflation:
• Inflation expectations have risen to 4.6% in February 2025, up from 4.0% in the previous month, marking the highest level in the past 10 months.
• RBA Monetary Policy:
• The Reserve Bank of Australia (RBA) is expected to cut interest rates by 75 basis points during 2025, with the first reduction potentially coming in the upcoming meeting.
• Unemployment and Labor Market:
• The unemployment rate has remained stable at around 4%, supported by job growth and public sector spending.
United States
• GDP and Economic Growth:
• The US economy continues to expand, supported by consumer spending and a strong labor market.
• Inflation:
• Inflation remains above the 2% target set by the Federal Reserve (Fed), prompting the central bank to maintain a restrictive monetary policy.
• Fed Monetary Policy:
• The Fed has kept its benchmark interest rate between 4.25% and 4.50%, reflecting a cautious stance amid inflationary pressures.
• Unemployment and Labor Market:
• The US unemployment rate remains low, indicating a resilient job market.
2. Geopolitical Factors
• US-China Trade Relations:
• The US administration has announced 25% tariffs on steel and aluminum imports, set to take effect on March 12, 2025. These measures could negatively impact the Australian dollar, given Australia’s reliance on commodity exports to China.
• Fiscal Policies:
• The US budget deficit and expansionary fiscal policies may influence the long-term strength of the US dollar.
3. Commitment of Traders (COT) Report - February 11, 2025
Non-Commercial Traders (Large Speculators):
• Long Positions: Data not available
• Short Positions: Data not available
• Net Position: -65,600 (short on AUD)
• This indicates a bearish sentiment among large speculators, who anticipate a depreciation of the Australian dollar.
Commercial Traders (Hedgers):
• Long Positions: Data not available
• Short Positions: Data not available
• Net Position: Data not available
• Without specific data, it is difficult to assess commercial traders’ positioning.
Small Traders (Non-Reportable):
• Long Positions: Data not available
• Short Positions: Data not available
• Net Position: Data not available
• Without precise data, evaluating small traders’ sentiment remains uncertain.
Interpretation:
• Large speculators hold net short positions on the Australian dollar, suggesting expectations of further depreciation.
• Due to the lack of detailed data on commercial and small traders, assessing their positioning remains inconclusive.
4. Possible Scenarios for AUD/USD
Scenario 1: AUD Depreciation (Bearish for AUD/USD)
• Triggers:
• The RBA cuts interest rates.
• Rising trade tensions between the US and China negatively impact Australian exports.
• A slowdown in China’s economy reduces demand for Australian commodities.
• Outcome:
• AUD/USD may drop below 0.64.
Scenario 2: Consolidation (Sideways Movement)
• Triggers:
• Mixed economic data from both countries.
• The Fed and RBA maintain cautious approaches.
• Outcome:
• AUD/USD remains between 0.65 and 0.67.
Scenario 3: AUD Appreciation (Bullish for AUD/USD)
• Triggers:
• The RBA delays or limits rate cuts.
• The US economy shows signs of slowing down, leading to a shift in Fed policy.
• Easing trade tensions between the US and China.
• Outcome:
• AUD/USD may rise above 0.70.
5. Favorable Scenario Based on Current Data
Given macroeconomic data, COT positioning, and geopolitical factors, the medium-term favorable scenario for AUD/USD is one of consolidation, with potential for a moderate AUD recovery.
• Reasons:
• Large speculators are heavily short on the Australian dollar, but potential RBA policy shifts may lead to a reversal.
• The Australian economy remains stable, with inflation slightly higher than expected.
• If the Fed signals a more dovish approach, the US dollar may weaken, supporting AUD/USD.
• Target:
• AUD/USD may test 0.67 - 0.69 in the coming months.
6. Disclaimer
This analysis is for educational purposes only and does not constitute investment advice. The Forex market is volatile, and trading decisions should be based on individual research and analysis. Any losses resulting from the use of this analysis are the sole responsibility of the investor.
This analysis includes updated macroeconomic indicators, geopolitical factors, data from the Commitment of Traders (COT) report, possible scenarios, and a favorable scenario based on existing economic data.
1. Macroeconomic Indicators and Monetary Policy
Australia
• GDP and Economic Growth:
• The Australian economy has shown modest growth in recent quarters, influenced by global demand for raw materials and economic conditions in China, Australia’s main trading partner.
• Inflation:
• Inflation expectations have risen to 4.6% in February 2025, up from 4.0% in the previous month, marking the highest level in the past 10 months.
• RBA Monetary Policy:
• The Reserve Bank of Australia (RBA) is expected to cut interest rates by 75 basis points during 2025, with the first reduction potentially coming in the upcoming meeting.
• Unemployment and Labor Market:
• The unemployment rate has remained stable at around 4%, supported by job growth and public sector spending.
United States
• GDP and Economic Growth:
• The US economy continues to expand, supported by consumer spending and a strong labor market.
• Inflation:
• Inflation remains above the 2% target set by the Federal Reserve (Fed), prompting the central bank to maintain a restrictive monetary policy.
• Fed Monetary Policy:
• The Fed has kept its benchmark interest rate between 4.25% and 4.50%, reflecting a cautious stance amid inflationary pressures.
• Unemployment and Labor Market:
• The US unemployment rate remains low, indicating a resilient job market.
2. Geopolitical Factors
• US-China Trade Relations:
• The US administration has announced 25% tariffs on steel and aluminum imports, set to take effect on March 12, 2025. These measures could negatively impact the Australian dollar, given Australia’s reliance on commodity exports to China.
• Fiscal Policies:
• The US budget deficit and expansionary fiscal policies may influence the long-term strength of the US dollar.
3. Commitment of Traders (COT) Report - February 11, 2025
Non-Commercial Traders (Large Speculators):
• Long Positions: Data not available
• Short Positions: Data not available
• Net Position: -65,600 (short on AUD)
• This indicates a bearish sentiment among large speculators, who anticipate a depreciation of the Australian dollar.
Commercial Traders (Hedgers):
• Long Positions: Data not available
• Short Positions: Data not available
• Net Position: Data not available
• Without specific data, it is difficult to assess commercial traders’ positioning.
Small Traders (Non-Reportable):
• Long Positions: Data not available
• Short Positions: Data not available
• Net Position: Data not available
• Without precise data, evaluating small traders’ sentiment remains uncertain.
Interpretation:
• Large speculators hold net short positions on the Australian dollar, suggesting expectations of further depreciation.
• Due to the lack of detailed data on commercial and small traders, assessing their positioning remains inconclusive.
4. Possible Scenarios for AUD/USD
Scenario 1: AUD Depreciation (Bearish for AUD/USD)
• Triggers:
• The RBA cuts interest rates.
• Rising trade tensions between the US and China negatively impact Australian exports.
• A slowdown in China’s economy reduces demand for Australian commodities.
• Outcome:
• AUD/USD may drop below 0.64.
Scenario 2: Consolidation (Sideways Movement)
• Triggers:
• Mixed economic data from both countries.
• The Fed and RBA maintain cautious approaches.
• Outcome:
• AUD/USD remains between 0.65 and 0.67.
Scenario 3: AUD Appreciation (Bullish for AUD/USD)
• Triggers:
• The RBA delays or limits rate cuts.
• The US economy shows signs of slowing down, leading to a shift in Fed policy.
• Easing trade tensions between the US and China.
• Outcome:
• AUD/USD may rise above 0.70.
5. Favorable Scenario Based on Current Data
Given macroeconomic data, COT positioning, and geopolitical factors, the medium-term favorable scenario for AUD/USD is one of consolidation, with potential for a moderate AUD recovery.
• Reasons:
• Large speculators are heavily short on the Australian dollar, but potential RBA policy shifts may lead to a reversal.
• The Australian economy remains stable, with inflation slightly higher than expected.
• If the Fed signals a more dovish approach, the US dollar may weaken, supporting AUD/USD.
• Target:
• AUD/USD may test 0.67 - 0.69 in the coming months.
6. Disclaimer
This analysis is for educational purposes only and does not constitute investment advice. The Forex market is volatile, and trading decisions should be based on individual research and analysis. Any losses resulting from the use of this analysis are the sole responsibility of the investor.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.