Australian Dollar Remains Subdued Despite Cautious RBA Tone; USD Stable Amid Mixed Fed Signals
The Australian Dollar (AUD) continues to trade weakly against the US Dollar (USD) on Tuesday, having extended losses from the previous session. The AUD/USD pair’s decline follows the release of the Reserve Bank of Australia (RBA) November monetary policy meeting minutes.
RBA’s Balanced Stance and Australian Employment Data: The RBA minutes revealed a more balanced policy stance, indicating that the cash rate could remain unchanged for longer if upcoming economic data proves stronger than anticipated. Despite this cautious tone, robust domestic employment data has reinforced expectations for the RBA’s measured approach. Latest interbank cash rate futures for December 2025 show only a 6% probability of a rate cut.
- Employment Highlights: Australia’s unemployment rate unexpectedly fell to 4.3% in October (from 4.5%), with a significant employment change of 42.2K (vs. 20K forecast). Full-time employment saw a substantial rise of 55.3K.
- RBA Commentary: RBA Deputy Governor Andrew Hauser noted the ongoing debate within the committee regarding the restrictiveness of monetary policy, highlighting potential implications for future decisions.
US Dollar and Fed Expectations: The US Dollar Index (DXY) is slightly lower, trading around 99.50, as traders prepare for a flood of US economic data following the government’s reopening. Despite this, the likelihood of a Fed rate cut in December has diminished, with the CME FedWatch Tool now indicating a 43% chance, down from 62% a week prior.
- Mixed Fed Signals: Fed Vice Chair Philip Jefferson suggested a slow approach to rate reductions, prioritizing labor market risks over inflation upside. In contrast, Governor Christopher Waller expressed concerns about the labor market slowdown and advocated for a December rate cut. Kansas City Fed President Jeffrey Schmid maintained that current “modestly restrictive” policy is appropriate to lean against demand growth.
- Economic Data & Shutdown Impact: National Economic Council Director Kevin Hassett warned that some October data might be incomplete due to the shutdown. Initial private-sector reports point to a cooling labor market and wavering consumer confidence amidst persistent inflation concerns. ADP data showed an average weekly job loss of 11,250 in the four weeks to October 25, and US employers slashed 153,074 jobs in October.
- US-China Trade: US Treasury Secretary Scott Bessent expressed confidence in finalizing a rare earths agreement with China by Thanksgiving, following recent bilateral meetings.
AUD/USD Technical Analysis: The AUD/USD pair is trading around 0.6490, consolidating within a rectangular range on the daily chart, indicating sideways movement. The price is below the nine-day Exponential Moving Average (EMA), signaling weakening momentum.
- Support: Immediate support is at the rectangle’s lower boundary near 0.6470, followed by the five-month low of 0.6414.
- Resistance: The primary hurdle is the nine-day EMA at 0.6514. A breach above this could improve short-term momentum, pushing the pair towards the rectangle’s upper boundary near 0.6630.
