Quick Summary of the Australian Dollar (AUD)
- The Australian Dollar (AUD) has been on an upward trend against the US Dollar (USD), marking gains for six consecutive days, spurred by rising inflation data.
- Anticipation that the Reserve Bank of Australia (RBA) will maintain current interest rates is growing, with some speculation of a potential rate hike due to persistent inflation.
- The US Dollar (USD) is under pressure due to increasing expectations of Federal Reserve (Fed) rate cuts, adding to the AUD/USD pair’s support.
- Technical analysis suggests the AUD/USD pair is exhibiting short-term bullish momentum, potentially targeting higher resistance levels.
- Recent economic data releases from both Australia and the United States are influencing currency valuations and market sentiment.
Australian Dollar Gains Momentum Amid Inflation Concerns
The Australian Dollar (AUD) is showing strength against the US Dollar (USD), continuing its rally for the sixth consecutive day. This upward trajectory is fueled by stronger-than-expected inflation figures, which are tempering expectations of the Reserve Bank of Australia (RBA) easing its monetary policy. In fact, the data has revived the possibility of another interest rate hike.
Recent data indicated that consumer prices in Australia rose for the fourth consecutive month in October. This places inflation further above the RBA’s target range of 2%–3%, adding pressure on the central bank to consider further measures to control rising prices.
⚡️ Insight: Rising inflation often leads to speculation about central bank actions. Monitoring inflation data closely is crucial for understanding potential shifts in monetary policy and their effects on currency values.
The RBA is widely expected to hold the Official Cash Rate (OCR) steady at 3.6% in its upcoming December meeting. This expectation is largely due to inflation remaining above the RBA’s preferred 2-3% target. However, RBA officials have also noted a slight increase in the unemployment rate. Despite this rise, the job market is viewed as generally healthy and expected to remain so.
As of November 27, the ASX 30-Day Interbank Cash Rate Futures indicated a December 2025 contract trading at 96.41. This implies only a 6% probability that the RBA will reduce the cash rate from 3.60% to 3.35% at its next Board meeting, reinforcing the expectation of stable rates in the near term.
Private Sector Credit and the AUD
The Reserve Bank of Australia released a report on Friday indicating that Private Sector Credit increased by 0.7% month-over-month in October. This figure surpassed both the previous reading and market forecasts of a 0.6% increase. Furthermore, annual growth in private sector credit edged up to 7.3% from a revised 7.2%.
✅ Tip: Private sector credit growth is a sign of economic activity and can influence central bank decisions. Keep an eye on this metric for clues about Australia’s economic health.
The AUD/USD pair is also receiving support from the struggles of the US Dollar (USD). This is due to increasing expectations of Federal Reserve (Fed) rate cuts in December. Traders are also pricing in the possibility of three additional rate cuts by the end of 2026, fueled by reports suggesting that White House National Economic Council Director Kevin Hassett is a leading candidate for the next Fed chair. Hassett is perceived to align with former US President Donald Trump’s preference for lower interest rates.
US Dollar Struggles and the AUD/USD Pair
The US Dollar Index (DXY), which measures the dollar’s value against six major currencies, is facing headwinds. It’s currently trading around 99.50.
📊 Analysis: A weakening US Dollar often provides a boost to other currencies, including the Australian Dollar. Keep an eye on the DXY as an indicator of overall USD strength.
The CME FedWatch Tool indicates that markets are pricing in over an 87% chance that the Fed will cut its benchmark overnight borrowing rate by 25 basis points (bps) at its December meeting. To put that into perspective, markets only priced a 39% probability a week prior.
Recent data from the US Department of Labor (DOL) showed that Initial Jobless Claims fell to 216,000 for the week ending November 22. This is a decrease of 6,000 from the previous week’s revised figure and is stronger than the market expectation of 225,000. The 4-week moving average also decreased by 1,000 to 223,750.
Key US Economic Indicators
The US Producer Price Index (PPI) remained steady at 2.7% year-over-year in September, aligning with expectations and August’s reading. Core PPI edged down to 2.6% from 2.9%, falling short of the 2.7% forecast. The stabilization of the PPI suggests that inflationary pressures have plateaued.
📍 Note: The PPI is a leading indicator of inflation. Monitoring this data provides insights into potential future price pressures that could influence monetary policy decisions.
US Retail Sales saw a modest increase of 0.2% month-over-month in September, a slowdown from the 0.6% increase in August. This indicates more cautious consumer spending. Separately, the Conference Board reported a significant decline in household sentiment, with Consumer Confidence dropping 6.8 points to 88.7 in November from 95.5 in October.
According to Fox Business, Fed Governor Christopher Waller stated on Monday that his primary concern is the weakening labor market. He added that inflation is not a big problem given recent softness in employment. Waller also suggested that the September payrolls figure would likely be revised lower and cautioned that concentrated hiring is not a good sign, signaling his support for a near-term rate cut.
Analyzing Australian Economic Releases Impact
The Australian Bureau of Statistics (ABS) reported that Private Capital Expenditure rose by 6.4% quarter-over-quarter in the third quarter. This represents an acceleration from the 0.2% gain in Q2 and exceeded the 0.5% expected. Additionally, the ABS released its first complete monthly Consumer Price Index (CPI) on Wednesday, which increased by 3.8% year-over-year in October, surpassing the market consensus of a 3.6% rise and a 3.5% increase prior.
📌 Remember: Stronger-than-expected economic data often supports a currency’s value, while weaker data can have the opposite effect. The AUD’s recent performance reflects this dynamic.
Australia’s S&P Global Manufacturing Purchasing Managers Index (PMI) came in at 51.6 in November, compared to 49.7 prior. Meanwhile, the Services PMI rose to 52.7 in November from the previous reading of 52.5, and the Composite PMI increased to 52.6 in November versus 52.1 prior.
Last week, the Reserve Bank of Australia published the Minutes of its November monetary policy meeting. The minutes indicated that board members signaled a more balanced policy stance, adding that they could keep the cash rate unchanged for longer if incoming data proves stronger than expected.
Australian Dollar Tests Key Resistance
The AUD/USD pair is currently trading around 0.6540. Technical analysis of the daily chart reveals that the pair is trading within a rectangular consolidation zone, reflecting a neutral bias. However, the pair has moved above the nine-day Exponential Moving Average (EMA), indicating strengthening short-term bullish momentum.
The AUD/USD pair may target the monthly high of 0.6580, followed by the psychological level of 0.6600. Further advances above this confluence resistance zone could pave the way for the pair to explore the region around the rectangle’s upper boundary near 0.6630.
💡 Strategy: Monitor key support and resistance levels to identify potential entry and exit points. Technical analysis can provide valuable insights into short-term price movements.
Conversely, the AUD/USD pair could find initial support at the nine-day EMA at 0.6504, aligning with the psychological level of 0.6500. A break below this critical support area would likely prompt the AUD/USD pair to test the lower boundary of the rectangle around 0.6420, which aligns with the five-month low of 0.6414 recorded on August 21.
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 British Pound.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.07% | 0.04% | 0.06% | 0.01% | -0.06% | -0.06% | 0.04% | |
| EUR | -0.07% | -0.04% | 0.00% | -0.06% | -0.14% | -0.13% | -0.04% | |
| GBP | -0.04% | 0.04% | 0.02% | -0.02% | -0.14% | -0.10% | -0.00% | |
| JPY | -0.06% | 0.00% | -0.02% | -0.03% | -0.12% | -0.13% | -0.03% | |
| CAD | -0.01% | 0.06% | 0.02% | 0.03% | -0.09% | -0.10% | 0.00% | |
| AUD | 0.06% | 0.14% | 0.14% | 0.12% | 0.09% | 0.00% | 0.07% | |
| NZD | 0.06% | 0.13% | 0.10% | 0.13% | 0.10% | -0.00% | 0.09% | |
| CHF | -0.04% | 0.04% | 0.00% | 0.03% | -0.00% | -0.07% | -0.09% |
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).
Frequently Asked Questions about the Australian Dollar
The Reserve Bank of Australia (RBA) is the central bank of Australia responsible for setting interest rates and managing monetary policy. It aims to maintain price stability (2-3% inflation) and contribute to currency stability, full employment, and economic prosperity. The RBA primarily influences the Australian Dollar (AUD) by adjusting interest rates; higher rates typically strengthen the AUD, and lower rates weaken it. Quantitative easing and tightening are also utilized.
Contrary to traditional views, in modern financial markets, moderately higher inflation often leads central banks to increase interest rates to control rising prices. Higher interest rates can attract capital inflows from global investors seeking better returns, increasing demand for the Australian Dollar (AUD) and strengthening its value.
Macroeconomic data provides insights into the health of an economy, impacting its currency’s value. Investors prefer stable, growing economies. Positive data, such as GDP, PMIs, employment figures, and consumer sentiment, can increase capital inflows, boosting the Australian Dollar (AUD). Strong economic performance may also prompt the Reserve Bank of Australia to raise interest rates, further supporting the AUD.
Quantitative Easing (QE) is a tool used when lowering interest rates isn’t enough to stimulate an economy. The Reserve Bank of Australia (RBA) creates new Australian Dollars (AUD) to buy assets (usually government or corporate bonds) from financial institutions, providing them with liquidity. QE typically weakens the AUD.
Quantitative tightening (QT) reverses QE. After QE, when an economy recovers and inflation rises, the Reserve Bank of Australia (RBA) stops buying assets and reinvesting bond principal. This reduces liquidity and is generally positive (bullish) for the Australian Dollar, as it signals a move toward controlling inflation and normalizing monetary policy.
Outlook for the Australian Dollar
In conclusion, the Australian Dollar’s recent strength is supported by a combination of factors, including robust economic data, rising inflation, and expectations surrounding central bank policies in both Australia and the United States. While technical indicators suggest short-term bullish momentum, traders should remain vigilant and monitor key support and resistance levels.
Looking ahead, the AUD’s performance will likely depend on upcoming economic releases, particularly inflation figures and employment data, as well as any shifts in monetary policy from the RBA and the Fed. These factors will continue to shape market sentiment and influence the trajectory of the AUD/USD pair.
