If you’ve been keeping a close eye on the exchange rates this year, you’ll be familiar with the rollercoaster ride that has been the AUD to USD. Talk about mercury in retrograde! And for Aussie travellers, these dips, spins and spirals can be the difference between a budget-stretched trip and a total upgrade. 

That’s why it’s a good idea to understand the “why” behind these exchange rate movements. Well…in terms that everyday travellers, like us, can grasp! To give you the expert scoop, we called in the bigwig – our Head of FX at Travel Money Group, Martin Diaz Farinasso. Here’s what we learned: 

What has affected the United States Dollar (USD) this year? 

The US Dollar remains the world’s primary reserve currency (and Travel Money Group's most sought-after currency!), but 2025 has seen it react sharply to a combination of domestic policy and global shifts, including: 

• US Federal Reserve uncertainty: The Federal Reserve has certainly kept the markets on their toes this year! Their stance on interest rates has shifted multiple times throughout the year, from a "higher for longer" approach to cautious cuts. For each swing in direction, the dollar is impacted.
• Policy and political shifts: The biggest impact on the USD this year has been the roll-out of tariffs, along with multiple policy changes under Trump’s second term in office. For example, tariffs as high as 200% were implemented (and delayed for months), which had a massive effect on the USD as uncertainty ultimately drives volatility.
• Shifting capital inflows: Global investors are reactive to policy changes. Due to these administrative changes, some external economies turned their attention away from the US market and decided to invest elsewhere. These decisions trickle down to the US labour market by “softening” new jobs, and affect the value of the United States Dollar, allowing currencies like the AUD to strengthen.

What factors drive the AUD vs. USD?

When you look at the AUD to USD exchange rate, you’re seeing a tug-of-war between two diverse economies. The main factors driving the rate up and down include:

• Differing interest rates: We’ve all felt the sting of interest rates this year (ouch!), and it stems back to the challenge between the Reserve Bank of Australia (RBA) and the US Federal Reserve. If the RBA keeps rates steady while the Federal Reserve cuts them, the AUD becomes more attractive to investors, pushing our exchange rate higher.
• Commodity pricing: The Australian Dollar is often coined the "commodity currency,” as we’re a top exporter of iron ore, coal, gold, and gas. When global demand and prices for these resources surge, the AUD typically strengthens. For example, if gold prices hit record highs, it’s often a good sign for the Aussie Dollar's purchasing power.
• China’s economic health: As China is Australia’s largest trading partner, its demand for our resources is a massive driver of the AUD. When the Chinese economy shows strength, the AUD usually gets a boost. But on the other hand, if China’s spending slows, the Australian Dollar often devalues.

How can travellers prepare for rate shifts? 

While the global market can feel a tad overwhelming, managing your travel budget doesn’t have to be! For everyday Aussie travellers, it’s all about working with what you can control: being money savvy and taking action while the AUD is on top. Here are a few ways: 

• Embrace the hybrid money strategy: While travel cards are widely accepted around the world, it’s best not rely on a single payment method. We always recommend a mix of foreign cash and a Travel Money Oz Currency Pass. Use a travel money card for your larger expenses (hotels, car rentals, and shopping) to lock in your rate, but always carry physical cash for backup.
• Factor in tipping: In the US, tipping isn't a bonus; it's a core part of the service economy. Standard tips for restaurants are now 18% to 25%, and you’ll need small bills ($1, $5, and $10) for hotel porters, valets, and bartenders. Cash is often the easiest and most appreciated way to tip.
• Lock in your exchange rate: Volatility means the rate you see today might not be the same tomorrow. If you were keeping tabs on the Market Rate for AUD to USD throughout the year, you would have seen USD dropping to as low as 0.60 per $1AUD in April and then recovering to 0.67 for every $1AUD by December 30 (the best it’s been since October 2024!). By getting your foreign cash at Travel Money Oz, you’ll be covered by Rate Move Protection against rate drops. So, if the rate gets better within 7 days of purchasing, we’ll give you the difference.

And there you have it – the lowdown on why the USD has been so moody this year and how to make the AUD work in your favour. A huge thanks to Martin for the insider knowledge!

Want to grab some Ben Franklin’s? Get all the USD you need by ordering online (with click & collect or same-day delivery) or stopping by your nearest Travel Money Oz store. 

^Disclaimer: 

^{This blog is provided for information only and does not take into consideration your objectives, financial situation, or needs. You should consider whether the information and suggestions contained in any blog entry are appropriate for you, having regard to your own objectives, financial situation, and needs. While we take reasonable care in providing the blog, we give no warranties or representations that it is complete or accurate, or that it is appropriate for you. We are not liable for any loss caused, whether due to negligence or otherwise, arising from the use of, or reliance on, the information and/or suggestions contained in this blog. Terms and conditions apply to Rate Move Protection.}