AUD/USD Slips to 0.6550 as Tariff Worries Resurface, RBA Rate Cut Eyed

AUD/USD Drops to 0.6550 on Tariff Concerns, RBA Rate Cut in Focus

AUD/USD Declines for Third Straight Day

The AUD/USD currency pair fell to around 0.6550 in early Asian trading on Monday, marking its third consecutive daily loss. Mounting concerns over a potential escalation in global trade tensions and expectations of a rate cut by the Reserve Bank of Australia (RBA) are putting pressure on the Australian Dollar.

Tariff Uncertainty Weighs on Aussie Sentiment

US Treasury Secretary Scott Bessent said Sunday that President Trump will send formal notifications to trade partners. These letters warn that tariffs may revert to April 2 levels by August 1 if no trade deal is reached. While not introducing new duties, the warning is seen as a way to pressure negotiations — stoking market fears of renewed trade wars.

These developments are adding volatility to global risk assets, with the Aussie Dollar particularly vulnerable due to its sensitivity to trade dynamics. Historically, risk-off sentiment has a direct negative impact on AUD performance.

RBA Rate Cut Expected on Tuesday

In domestic policy, markets are preparing for the RBA's interest rate decision on Tuesday, where a 25 basis point rate cut to 3.6% is widely anticipated. This would mark the third cut in 2025, as the central bank continues its easing cycle in an attempt to stimulate economic activity and counteract slowing inflation.

Traders are also pricing in additional cuts in August and November, signaling bearish sentiment for the AUD over the medium term.

For more on interest rate movements, check out our central bank tracker.
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Key Takeaways

• AUD/USD trades near 0.6550, hitting a new weekly low.
• Renewed tariff threats from the US pressure risk currencies.
• The RBA is expected to cut rates on Tuesday to 3.6%.
• Traders anticipate further rate cuts in August and November.