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The Australian dollar (AUD) remained stable on Wednesday after experiencing losses in the previous trading day. The AUD/USD pair is holding its ground as the US dollar (USD) remains firm, supported by steady US yields ahead of the Federal Reserve (Fed) rate decision to be announced later. No interest rate changes are expected due to ongoing inflation concerns and heightened economic uncertainty.
The Australia West Pacific Leading Economic Index increased by 0.1% month-on-month in February 2025, maintaining the same growth rate as the previous month. Meanwhile, the six-month annualized rate of growth in the index, which forecasts the change in economic activity relative to trend over the next three to nine months, rose to 0.8% from 0.6% in January.
Treasury Secretary Jim Chalmers addressed trade tensions in a speech on Tuesday, rejecting a “race to the bottom” strategy of tariffs. Chalmers criticized the Trump administration’s trade policies as “self-defeating and self-destructive”, stressing that Australia needed to focus on economic resilience rather than retaliation. He also condemned the US decision to exclude Australia from steel and aluminium tariffs, calling it “disappointing, unnecessary, pointless and wrong,” according to The Guardian.
On Monday, Reserve Bank of Australia (RBA) Assistant Governor (Economics) Sarah Hunt reiterated the central bank’s cautious stance on rate cuts. The RBA’s February statement showed a more conservative tone than markets expected, with a strong focus on US policy decisions and their potential impact on Australia’s inflation outlook.
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