The United States just announced new key economic indicators. These modifications are set to shake up the foreign exchange market, particularly the AUD/USD currency combo. The private sector created 104,000 new jobs in July, a sign that the labor market remains strong and stable. On top of that, the advance estimate for second quarter Gross Domestic Product (GDP) was a strong 3% annualized growth rate. Australia’s economic data revealed a rise in its Consumer Price Index (CPI), which increased 0.7% quarter-over-quarter in Q2 2025 and 2.7% year-over-year. The Australian Dollar has hit new lows not seen since July against the U.S. Dollar. This downward pressure is bringing the AUD/USD pair further toward the 0.6450 region.
Tracking the release and reaction to key economic data from both countries gives valuable context to expectations about currency appreciation/depreciation and market expectations. With the Federal Reserve’s upcoming decisions looming large, analysts are watching the economic performance on both sides of the Pacific Ocean—here in the U.S. and in Australia.
U.S. Labor Market Shows Resilience
Second, the bad news — the U.S. private sector added just 104,000 jobs in July. This robust growth is an encouraging sign of economic resilience amid persistent inflation and economic headwinds. Though down significantly from a year ago, this figure is a pretty good sign of employment growth becoming more established, furthering to restore consumer confidence and spending. The labor market’s strength plays a crucial role in the Federal Reserve’s considerations regarding interest rates.
Second, job growth is a leading indicator of economic stability. That stability provides the Federal Reserve a strong enough footing to revisit possible changes in monetary policy. Third, we argue that a tight labor market increases wage growth. This, in turn, creates additional consumer spending and fuels widespread economic growth.
The main Personal Consumption Expenditures (PCE) Price Index recently surged by 2.5% for the second quarter. This was unprecedented even along with the release of employment data. It directly drives interest rate decisions. This key measure of inflation is the most closely watched by policymakers. An increasing PCE index could force the Federal Reserve’s hand to raise monetary policy in order to keep inflationary forces under control.
GDP Growth Signals Economic Expansion
July’s advance release of the GDP for the second quarter came in with a better-than-expected annualized growth rate of 3%. This becomes an unexpected positive surprise, which is interpreted as a USD-positive development as it implies a robust economy that can handle inflationary pressures. GDP is the monetary value of all final goods and services produced within the U.S. borders during a given period of time. These are the figures the Bureau of Economic Analysis releases quarterly.
As analysts will tell you, nothing moves currency valuation more than a positive surprise in the GDP number. A positive print would likely increase confidence in the U.S. economy, increasing demand for the dollar. Such disappointing figures can quickly weigh on the greenback. Traders will immediately bet that future economic prosperity and the direction of monetary policy is going to be different in response.
That’s especially true with the GDP data, which is the biggest market mover. Investors pay close attention and tend to move fast, buying or selling ahead of or after the report depending on whether the numbers beat or miss the forecast. It’s the advance estimate of GDP that’s most powerful, though, as it gets released and sets the tenor for all economic beats to follow.
Australian Economy Faces Inflationary Pressures
Opposite the Pacific, Australia’s economic landscape is similarly characterized by building inflationary headwinds. The Consumer Price Index has increased by 0.7% quarter-over-quarter Q2 2025 as well as 2.7% year-over-year. These numbers reflect the difficult balancing act between cutting inflation and continuing to grow the economy.
Australia’s consumer price index, or CPI, is increasing—mirroring the global inflation trend as a whole. Central banks the world over are doing whatever they can to combat these issues. As inflation rises, consumer real income can be likely to drop, which could slow overall economic activity. For the Reserve Bank of Australia, these changes will make increased flexibility within its monetary policy framework essential.
The broad exchange rate dynamics are characterized by the Australian Dollar trading at new July lows against the U.S. Dollar. As traders and investors seize opportunities with the release of U.S. macroeconomic figures, the AUD/USD pair tests the important support area around 0.6450. According to analysts, regular updates from each economy will continue to move this exchange rate.