AUD/USD Slips to 0.7020 for Fourth Day as NAB Tips RBA Rate Cuts Ahead

The Quick Take

• AUD/USD traded near 0.7020 as the Australian dollar extended a four-day losing streak
• NAB forecasts the Reserve Bank of Australia will cut interest rates in coming months
• US CPI came in broadly in line with expectations, reinforcing the view that the Fed will hold rates higher for longer

The Australian dollar extended its losing streak to four consecutive sessions, trading near 0.7020 against the US dollar as markets digested two converging signals: a US inflation print that met expectations — reinforcing the Fed's higher-for-longer stance — and National Australia Bank's forecast that the Reserve Bank of Australia will cut interest rates in the coming months. The interest rate differential between the Fed funds rate and the RBA cash rate is the primary driver of AUD/USD at current levels, and a diverging rate outlook — RBA easing while the Fed holds — directly compresses this differential, exerting downward pressure on the AUD.

A weaker Australian dollar carries mixed implications across Australian industries. Export-oriented sectors — including iron ore miners BHP, Rio Tinto, and Fortescue, LNG producers, and agricultural exporters — benefit from currency depreciation as their USD-denominated commodity revenues translate to more AUD earnings. Conversely, Australian importers, domestic retailers, and households with USD-denominated debt face higher costs. Regionally, a weaker AUD reflects broader risk-off sentiment across commodity currencies, putting pressure on New Zealand's NZD and Canadian CAD, which share similar commodity-export profiles and are vulnerable to the same Fed-higher-for-longer narrative.

The key forward signal for AUD/USD is the next RBA monetary policy board meeting, where any explicit rate cut guidance would cement the bearish AUD thesis and potentially push the pair below the 0.70 psychological support level. Simultaneously, US non-farm payrolls and the next CPI print will determine whether the Fed actually delays cuts as implied by the futures market. The macro variable is China's economic growth trajectory — Australia's largest trading partner — where a slowdown in Chinese construction and industrial output directly depresses demand for Australian iron ore and coal, adding a fundamental weight to the currency.

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