The Australian dollar rose broadly on Tuesday against a basket of global currencies, rebounding sharply from a two-week low against its U.S. counterpart, following an unexpected decision by the Reserve Bank of Australia to keep interest rates unchanged at 3.85%.

The decision came as a surprise to the markets, which had confidently priced in at least a 25-basis-point rate cut. A majority of the RBA board members indicated the need for more data to confirm that inflation is trending toward the medium-term target range.

The Price 

AUD/USD exchange rate today: The Australian dollar rose against its U.S. counterpart by 0.95% to (0.6559), from today’s opening level at (0.6497), with a session low at (0.6491).

On Monday, the Australian dollar fell by 1.0% against the U.S. dollar, marking a third consecutive daily loss and hitting a two-week low at 64.85 cents, as investors increasingly favored the U.S. dollar as one of the most attractive investment opportunities.

Reserve Bank of Australia

In an unexpected move, the Reserve Bank of Australia on Tuesday kept interest rates unchanged at 3.85%, the lowest level since May 2023, defying market expectations for a 25-basis-point cut to 3.60%.

RBA Holds Rates Steady Against Market Expectations

The Reserve Bank of Australia stated it remains cautious about the inflation outlook, adding that six members voted in favor of holding rates steady while three voted against — a rare outcome that reflects division within the board.

The board said in a statement: "The Board judged that it could wait for further information to confirm the ongoing path of inflation toward 2.5% on a sustained basis." It added: "Monetary policy is well-positioned to respond decisively should international developments have material effects on activity and inflation in Australia."

The central bank explained that while recent monthly CPI data suggests inflation in the June quarter is likely to be broadly in line with expectations, it was, on the margin, slightly stronger than forecast.

Australian Interest Rates

Following the RBA meeting, interest rate swaps now imply a total easing of 50 basis points by year-end.

Pricing for a 25-basis-point rate cut by the RBA in August has declined from 65% to 50%.

The Reserve Bank of Australia has cut interest rates twice since February to the current 3.85% range as inflation slows toward the 2–3% target band.

At the conclusion of its July 8 meeting, the Reserve Bank of Australia’s Monetary Policy Committee decided on Tuesday morning to keep interest rates unchanged at 3.85%, the lowest level since May 2023, defying market expectations of a 25-basis-point rate cut.

The Reserve Bank of Australia stated that it is waiting for “additional information to confirm that inflation remains on track to reach 2.5% on a sustained basis.”

Gold prices held steady during Monday’s trading session amid a notable rise in the US dollar against most major currencies, as traders monitored developments on the trade front.

US Treasury Secretary Scott Bessent said in an interview with CNBC that the administration will issue a number of trade-related announcements within the next 48 hours. He did not specify which countries would be affected, adding that the coming days would be packed with new trade offers.

For his part, US President Donald Trump warned countries aligning themselves with the BRICS alliance—which he described as opposing American interests—that they will face an additional 10% tariff.

Trump wrote on social media: “Any country aligning with the anti-America policies of BRICS will face an additional 10% tariff. There will be no exceptions to this policy.”

Trump has long criticized BRICS, a bloc that includes China, Russia, and India.

The United States had initially set July 9 as the deadline for countries to reach a trade agreement, but US officials now say that tariffs will begin on August 1. Trump stated that he would send letters to countries informing them of the tariff rates in case no agreement is reached.

On Monday, President Donald Trump announced that his administration will impose a 25% tariff on imports from South Korea and Japan starting August 1, as part of a batch of letters to be sent to a number of foreign nations.

The White House also confirmed Monday that President Donald Trump will sign an executive order extending the temporary freeze on the so-called “reciprocal tariffs” until August 1, granting targeted countries an additional three-week grace period to reach trade deals with the United States.

Meanwhile, the US dollar index rose by 0.3% to 97.4 points at 19:51 GMT, recording a high of 97.6 points and a low of 96.8 points.

In terms of market performance, spot gold prices were steady at $3,344.80 per ounce by 19:52 GMT.

Ongoing geopolitical conflicts—including an active war—alongside market instability, declining steel demand in some global regions, and rising protective tariffs on exporting countries, have pushed several steel-producing nations, including China, to reassess and refocus their steel industry supply chains.

Faced with weak domestic demand for steel due to slowing economic growth, China’s steel industry has revised its export roadmap. For example, the value of its alloy exports to Russia rose by about 16% in the first five months of 2025, compared to just 1.3% in 2024. According to the report, the export list mainly includes types of stainless and specialized steel not manufactured in Russia. However, imports of standard construction steel from China have started gaining momentum in several regions.

Steel production in Russia declines

Media reports indicate that Russia’s steel production is in decline due to sanctions imposed following its invasion of Ukraine. According to a report by World Steel, Russian steel output fell 7% year-on-year to just over 70 million tons in 2024. Within the Russian steel sector, companies cut production by between 8% and 14%.

When sanctions were first imposed, Russia redirected its steel supply toward the Middle East, North Africa, China, and even India in an attempt to offset the loss of EU and U.S. markets. However, in the years that followed, the Chinese market also began to slip away from the Russian Federation. By 2024, shipments of ferrous metals to China had nearly halved.

At the same time, Russian steel mills found themselves grappling with cheap steel that China began shipping to Russia to offload its own industry’s surplus. Now, China’s attempts to export steel to MENA countries are also starting to fade.

The Chinese game

While this clearly affects Russia, the bigger story here is about China. Viewed from another angle, both countries are competing for position in the global steel industry. Yet the Kremlin is at a disadvantage due to sanctions. China, on the other hand, enjoys the upper hand as the world’s largest steel producer and consumer.

At present, China is making a concerted effort to find new buyers, especially as local buyers and former export partners are no longer purchasing steel at the same rate as in previous years. Recently, Beijing turned to Asian and Southeast Asian markets to flood them with steel—until some responded with tariffs, much like the United States did.

So far, this strategy has maintained China’s steel output levels. However, some industry experts believe that total Chinese steel consumption—including exports—will eventually decline either by the end of 2025 or sometime next year. The Chinese steel industry continues to prioritize exports.

According to Reuters, China’s steel product exports rose by 1.15% between April and May, and by about 10% year-on-year. This helped push steel output to a seven-month high of 10.58 million tons. The reasons for this export surge varied, including fears of upcoming tariff hikes.

Between January and May 2025, Chinese steel exports hit a record high of around 48 million metric tons, an 8.9% increase year-on-year. At the same time, imports fell by about 16% year-on-year in the first five months of 2025, reaching just 2.55 million metric tons.

Russia remains one of the few destinations where China markets its steel at low prices, hoping export conditions continue to improve. Contributing factors to the export rise include weak local demand in China, Russia’s limited expertise in producing specialized steel products, and, of course, low Chinese steel prices. Some countries are growing tired of China’s game.

It remains to be seen how long China’s export maneuver will stay competitive in the steel market. Even countries like Vietnam and India have already imposed or are planning to impose additional tariffs. Others, like Japan, are considering the idea. For instance, in late 2024, Japan’s leading steelmaker Nippon Steel made a public request for the Japanese government to impose safeguard tariffs on Chinese steel exports.