AUD/USD, NZD/USD surge on Chinese stimulus, US fear
Learn how Chinese equity highs and US interest rate expectations are propelling AUD/USD and NZD/USD to new highs, and what to watch for in these volatile markets.
Key points
- NZD/USD hit year-to-date high above 0.5800, recovering from February lows
- Chinese equities reach highest prices since January 2022, boosting AUD and NZD
- US interest rate cuts expected, lowering USD appeal amid economic fears
- AUD/USD around 0.6400 now sits in the middle of its yearlong range of 0.6800 to 0.6100
COMMODITY CURRENCIES MOVING HIGHER
The Australian dollar (AUD) and New Zealand dollar (NZD) are surging amid Chinese stimulus and US market fears, marking a notable upswing for commodity currencies. The NZD/USD pair has reached a year-to-date high above 0.5800, recovering from historic lows at the start of February. This rebound, driven by a mix of economic factors, suggests the possibility of a new range for these currencies. Despite initial challenges this year due to tariffs and risk-off sentiment, the strong upward momentum in commodity currencies signals potential trading opportunities as global economic conditions shift.
CHINESE STOCKS SPUR AUD, NZD UPSIDE
Chinese equities have reached their highest prices since January 2022 this week, significantly influencing the upward trajectory of the Australian and New Zealand dollars. Over the past decade, the Australian dollar has exhibited an exclusively positive correlation to Chinese large cap stocks. This correlation between Chinese market strength and commodity currency performance highlights the importance of China's economic activity on the AUD and NZD. As Chinese stocks continue their rally, traders observe the positive impact on these currencies, considering historical data and market trends to anticipate further movements.
US FEAR, LOWER RATES DRIVING USD LOWER
Falling US interest rates amidst growing market fears are contributing to a weaker US dollar, influencing forex market dynamics. The shift in rate expectations, with the FedWatch tool indicating potential cuts, highlights the currency's vulnerability to domestic economic sentiment. This environment presents a unique set of challenges and opportunities for traders, as lower rates typically decrease the appeal of USD holdings. In recent weeks, however, this fear has not led to demand in traditionally risk-on currencies like AUD and NZD. So far this week, recession fears have partially subsided and US equities have bounced slightly, opening the door for confidence in riskier currencies while still believing US rates will come down. Understanding these dynamics is crucial for developing strategies that leverage the current economic backdrop and its impact on USD pairings.
AUD/USD FORECAST: 0.6000 vs 0.6800
AUD/USD remains a focal point for currency traders, fluctuating between potential highs and lows amidst evolving global conditions. While it has not surpassed 0.6400 in 2025, the pair's trajectory is linked to broader market influences, including Chinese economic performance and US interest rate policies. Traders must navigate this complex landscape, weighing historical price action and current forecasts in their strategic considerations. Whether the pair returns to its previous highs around 0.6800 or descends to 0.6000, the outlook for the AUD/USD offers diverse possibilities that require careful analysis and adaptable trading approaches.
How to trade AUD/USD
- Open an account to get started, or practice on a demo account
- Choose your forex trading platform
- Open, monitor, and close positions on AUD/USD
Trading forex requires an account with a forex provider like tastyfx. Many traders also watch major forex pairs like EUR/USD and USD/JPY for potential opportunities based on economic events such as inflation releases or interest rate decisions. Economic events can produce more volatility for forex pairs, which can mean greater potential profits and losses as risks can increase at these times.
You can help develop your forex trading strategies using resources like tastyfx’s YouTube channel. Our curated playlists can help you stay up to date on current markets and understanding key terms. Once your strategy is developed, you can follow the above steps to opening an account and getting started trading forex.
Your profit or loss is calculated according to your full position size. Leverage will magnify both your profits and losses. It’s important to manage your risks carefully as losses can exceed your deposit. Ensure you understand the risks and benefits associated with trading leveraged products before you start trading with them. Trade using money you’re comfortable losing.