The Australian Dollar (AUD) holds ground against the US Dollar (USD) on Monday ahead of the looming key inflation update this week. Traders will likely observe Australia’s first “complete” monthly CPI on Wednesday for October to gain further impetus regarding the Reserve Bank of Australia (RBA) monetary policy.
The AUD/USD pair received support as the AUD gained on growing expectations of an RBA cautious stance. Minutes from the RBA’s November meeting indicated the central bank may keep rates unchanged for an extended period. ASX 30-Day Interbank Cash Rate Futures show that as of November 20, the December 2025 contract traded at 96.41, implying a 6% probability of a rate cut to 3.35% from 3.60% at the upcoming RBA Board meeting.
RBA Assistant Governor Sarah Hunter noted on Thursday that “sustained above-trend growth could fuel inflationary pressures.” Hunter noted that monthly inflation data can be volatile and that the central bank won’t react to a single month of figures. She added that the RBA is closely assessing labor-market conditions to gauge supply capacity and is examining how the effects of monetary policy may be changing over time.
US Dollar slides as Fed rate-cut bets resurface
- The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, is halting its five-day winning streak and trading around 100.10 at the time of writing. The Greenback weakens as renewed expectations of a Fed rate cut in December weigh on sentiment.
- The CME FedWatch Tool suggests that markets are now pricing in a 69% chance that the Fed will cut its benchmark overnight borrowing rate by 25 basis points (bps) at its December meeting, up from 44% probability that markets priced a week ago.
- New York Fed President John Williams said on Friday that policymakers could still cut rates in the “near-term,” a remark that lifted market odds for a December move. Moreover, Fed Governor Stephen Miran said that Nonfarm Payrolls data supports a December rate cut, adding that if his vote were decisive, he “would vote for a 25-bps cut.”
- The University of Michigan’s (UoM) Consumer Sentiment Index rose in November to 51 from a preliminary 50.3, beating forecasts but posting a decline from October’s reading of 53.6. Inflation expectations improved, with the one-year outlook easing to 4.5% from 4.7% and the five-year measure falling to 3.4% from 3.6%.
- Nonfarm Payrolls (NFP) in the United States (US) rose by 119,000 in September, compared to the 4,000 decrease (revised from +22,000) recorded in August. This figure surpassed the market expectation of 50,000. The US Unemployment Rate ticked up to 4.4% in September from 4.3% in August. The Average Hourly Earnings held steady at 3.8% YoY, compared to the market expectation of 3.7%.
- FOMC Minutes for the October 28-29 meeting indicated that Fed officials are divided and cautious about the path forward for interest rates. Most participants indicated further rate cuts would likely be appropriate over time, but several indicated they did not necessarily view a reduction in December as appropriate.
- The preliminary reading of Australia’s S&P Global Manufacturing Purchasing Managers Index (PMI) came in at 51.6 in November, versus 49.7 prior. Meanwhile, Services PMI rose to 52.7 in November from the previous reading of 52.5, while the Composite PMI increased to 52.6 in November versus 52.1 prior.
- The Reserve Bank of Australia published the Minutes of its November monetary policy meeting on Tuesday, indicating that board members signalled a more balanced policy stance, adding that it could keep the cash rate unchanged for longer if incoming data proves stronger than expected.
Australian Dollar hovers near 0.6450 within a consolidation phase
The AUD/USD pair is trading around 0.6450 on Monday. The daily chart shows the pair trading sideways within a rectangular range, reflecting a phase of price consolidation. Meanwhile, the price continues to hold below the nine-day Exponential Moving Average (EMA), indicating subdued short-term momentum.
The AUD/USD pair finds immediate support at the lower boundary of the rectangle around 0.6420, followed by the five-month low of 0.6414, which was recorded on August 21.
On the upside, the primary barrier lies at the nine-day EMA of 0.6481, followed by the psychological level of 0.6500. A break above this level would improve the short-term price momentum and lead the pair to reach the rectangle’s upper boundary near 0.6620.
Australian Dollar Price Today
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.03% | 0.06% | 0.19% | 0.04% | -0.03% | 0.10% | 0.13% | |
| EUR | -0.03% | 0.04% | 0.16% | 0.02% | -0.06% | 0.07% | 0.10% | |
| GBP | -0.06% | -0.04% | 0.12% | -0.02% | -0.09% | 0.03% | 0.07% | |
| JPY | -0.19% | -0.16% | -0.12% | -0.13% | -0.21% | -0.07% | -0.03% | |
| CAD | -0.04% | -0.02% | 0.02% | 0.13% | -0.07% | 0.05% | 0.09% | |
| AUD | 0.03% | 0.06% | 0.09% | 0.21% | 0.07% | 0.13% | 0.17% | |
| NZD | -0.10% | -0.07% | -0.03% | 0.07% | -0.05% | -0.13% | 0.04% | |
| CHF | -0.13% | -0.10% | -0.07% | 0.03% | -0.09% | -0.17% | -0.04% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).
RBA FAQs
The Reserve Bank of Australia (RBA) sets interest rates and manages monetary policy for Australia. Decisions are made by a board of governors at 11 meetings a year and ad hoc emergency meetings as required. The RBA’s primary mandate is to maintain price stability, which means an inflation rate of 2-3%, but also “..to contribute to the stability of the currency, full employment, and the economic prosperity and welfare of the Australian people.” Its main tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will strengthen the Australian Dollar (AUD) and vice versa. Other RBA tools include quantitative easing and tightening.
While inflation had always traditionally been thought of as a negative factor for currencies since it lowers the value of money in general, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Moderately higher inflation now tends to lead central banks to put up their interest rates, which in turn has the effect of attracting more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in the case of Australia is the Aussie Dollar.
Macroeconomic data gauges the health of an economy and can have an impact on the value of its currency. Investors prefer to invest their capital in economies that are safe and growing rather than precarious and shrinking. Greater capital inflows increase the aggregate demand and value of the domestic currency. Classic indicators, such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can influence AUD. A strong economy may encourage the Reserve Bank of Australia to put up interest rates, also supporting AUD.
Quantitative Easing (QE) is a tool used in extreme situations when lowering interest rates is not enough to restore the flow of credit in the economy. QE is the process by which the Reserve Bank of Australia (RBA) prints Australian Dollars (AUD) for the purpose of buying assets – usually government or corporate bonds – from financial institutions, thereby providing them with much-needed liquidity. QE usually results in a weaker AUD.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the Reserve Bank of Australia (RBA) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the RBA stops buying more assets, and stops reinvesting the principal maturing on the bonds it already holds. It would be positive (or bullish) for the Australian Dollar.
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