The Australian Dollar (AUD) was supported as copper futures surged to a new record high on the Comex exchange on Tuesday (3/26), benefiting from Australia's position as one of the leading copper exporters. Bloomberg reported that Trump could speed up the timetable for imposing tariffs on US copper imports. While the Commerce Department originally had 270 days from February 2025 to investigate and report on potential tariffs, recent developments suggest that the tariffs could be implemented within weeks, much sooner than the original deadline.

The AUD weakened against the US Dollar (USD) after the release of the Consumer Price Index (CPI) on Wednesday, which rose 2.4% year-on-year in February, slightly below the 2.5% increase in January and market expectations of 2.5%.

Australian Treasurer Jim Chalmers delivered the 2025/26 budget on Tuesday, outlining key economic forecasts and tax cuts totaling about A$17.1 billion over two rounds. The budget deficit is projected at A$27.6 billion in 2024-25 and A$42.1 billion in 2025-26. GDP growth is forecast to reach 2.25% in fiscal 2026 and 2.5% in 2027. The tax cuts appear aimed at strengthening political support.

The AUD is supported as investors anticipate the Reserve Bank of Australia (RBA) will keep interest rates unchanged next week, following its first rate cut of 25 basis points in four years in February. RBA Assistant Governor (Economics) Sarah Hunter reiterated the central bank's cautious stance on further cuts, with the February policy statement signaling a more conservative approach than market expectations, particularly regarding US policy decisions and their impact on Australia's inflation outlook.

In addition, expectations of Chinese stimulus could boost the Australian economy, given the strong trade ties between the two countries. The Chinese Communist Party and the State Council have proposed measures to "massively boost consumption" by raising wages and easing financial burdens—an effort to restore consumer confidence and revitalize the struggling economy. (Newsmaker23)

Source: FXstreet