The Australian Dollar (AUD) remained resilient against the US Dollar (USD) on Thursday, supported by steady policy signals from China and a cautiously hawkish tone from the Reserve Bank of Australia (RBA).
The People’s Bank of China (PBoC) left its key Loan Prime Rates (LPRs) unchanged for November—holding the one-year LPR at 3.00% and the five-year rate at 3.50%. Given Australia’s close trade ties with China, stable Chinese borrowing costs helped sustain AUD demand.
RBA Tone Supports AUD
RBA Assistant Governor Sarah Hunter stated that “sustained above-trend growth could fuel inflationary pressures,” adding that the central bank will avoid reacting to a single month of data due to volatility. She emphasized that the RBA is closely assessing labor-market conditions, supply capacity, and the evolving impact of past policy tightening.
The AUD also gained support from expectations that the RBA will maintain a cautious, higher-for-longer approach to rates. Minutes from the RBA’s November meeting signaled that policymakers may leave the cash rate unchanged for an extended period if economic data continues to outperform.
Strong Q3 wage growth, solid employment data, and persistently high inflation have contributed to the view that Australia’s easing cycle has effectively stalled.
As of November 18, ASX 30-Day Interbank Cash Rate Futures priced only an 8% chance of a December 2025 rate cut to 3.35% from 3.60%, underscoring expectations of prolonged policy stability.
US Dollar Gains as Fed Rate-Cut Bets Diminish
The US Dollar Index (DXY) trades near 100.20, bolstered by diminishing expectations of a Federal Reserve rate cut in December. Traders await the delayed US September Nonfarm Payrolls (NFP) release for fresh policy cues.
The US Dollar gained more than 0.5% in the previous session after the FOMC Minutes revealed a divided committee. While most officials still support further cuts over time, several policymakers felt a December reduction may not be warranted.
Market pricing now assigns only a 33% probability of a 25 bps rate cut in December—down sharply from 63% a week earlier, according to the CME FedWatch Tool.
Recent Fed commentary has added to the cautious tone:
- Thomas Barkin (Richmond Fed): Labor market appears more balanced; inflation progress uncertain.
- Philip Jefferson (Fed Vice Chair): Labor-market risks now outweigh inflation risks; policy moves should proceed slowly.
Political uncertainty also entered the picture after President Donald Trump said he “would love” to remove Fed Chair Jerome Powell, adding that he already has a preferred successor.
Labor market data has been mixed. Initial Jobless Claims rose to 232,000, while ADP reported that employers cut an average of 2,500 jobs per week over the past month. Shutdown-related gaps in government data may mean some October figures will “never materialize,” according to NEC Director Kevin Hassett.
Australia Data Snapshot
- Wage Price Index (Q3): +0.8% QoQ, +3.4% YoY — both in line with expectations.
- RBA Minutes reinforced a balanced policy stance, with rates likely held longer if data remains strong.
AUD/USD Technical Outlook
AUD/USD trades near 0.6480, consolidating within a rectangular range on the daily chart. The pair remains below the 9-day EMA, signaling weak short-term momentum.
Key Levels:
- Support:
- 0.6470 — lower rectangle boundary
- 0.6414 — five-month low (Aug 21)
- Resistance:
- 0.6500 — psychological level
- 0.6503 — 9-day EMA
- Break above these would open a move toward 0.6630 (upper rectangle boundary)
Australian Dollar Price Performance Today
AUD is strongest against the Japanese Yen, while showing mild strength or softness across other majors.
Australian Dollar FAQs (Summary)
- Key Drivers: RBA interest rates, iron ore prices, Chinese economic conditions, domestic inflation, trade balance, and global risk sentiment.
- RBA Impact: Higher rates support AUD; lower rates weigh on it.
- China’s Influence: Strong Chinese demand boosts AUD due to export reliance.
- Iron Ore: Rising prices typically lift AUD.
- Trade Balance: A surplus strengthens AUD; a deficit pressures it lower.
