Australian Dolllar edges lower to near 0.6850 on robust US jobs data
- AUD/USD posts modest losses near 0.6860 in Monday’s early Asian session.
- US NFP rose by 165,000 in October, above the market consensus.
- RBA hikes the OCR to its highest level in 18 years last week.
The AUD/USD pair trades with mild losses around 0.6860 during the early Asian session on Monday. Stronger-than-expected US employment data provide some support to the US Dollar (USD) against the Australian Dollar (AUD). Traders brace for China’s Consumer Price Index (CPI) inflation report, which is due later in the day.
Data released by the US Bureau of Labor Statistics (BLS) on Friday showed that Nonfarm Payrolls (NFP) climbed by 165,000 in October. This figure followed a 60,000 rise in September (revised from 29,000) and surpassed market expectations of 65,000. Meanwhile, the Unemployment Rate declined to 4.1% in October from 4.2% in September.
Traders raise their bets on a further quarter percentage point hike at the December policy meeting. Probability rose to 79.6%, according to the CME FedWatch tool, though the indicator pointed to only one more increase after.
On the Aussie front, the Reserve Bank of Australia (RBA) decided to lift the Official Cash Rate (OCR) by 25 basis points (bps) to 4.85% from 4.60%. This put the cash rate at the highest level Australia has seen since 2008.
In its monetary policy statement, the Australian central bank said inflation remains elevated and is forecast to continue to do so through much of 2027. Treasurer Jim Chalmers acknowledged the government "has more work to do" to help bring down inflation.
Aussie slides as risk selloff and RBA credibility worries weigh
Strategists at Societe Generale highlight that AUD/USD traded in a “0.6862 - 0.6954 overnight range,” with spot “skid[ding] below 0.69 for first time since early July” and now “on track for lowest weekly close since January.” They flag nearby “support 0.6865, resistance 0.7080,” and note that the move has been compounded by policy concerns after Hauser “warns public confidence in ability of RBA to counter inflation is at risk.” According to Societe Generale, broader “FX spillovers from the selloff in stocks surfaced in the AUD, the SEK and NZD in G10,” while “the KRW and MXN rank among the worst performers in EM.”
Daly flags more tightening as strong jobs data keeps Fed focused on inflation
Fed’s Daly delivered a distinctly more hawkish tone, with an FXS Speechtracker score of 8/10 compared to the established baseline of 6.4/10, underscoring that “real wages are falling” even as the job report is “good news” and wage growth “isn’t booming.” The emphasis that inflation has been “high for too long,” must remain the “number 1 priority,” and that policy “will have to tighten further” while the strong labor market gives the Fed “latitude” reinforces a bias toward additional rate hikes, albeit in a “deliberate” and data-dependent manner. Overall, the message leans toward further tightening risk, with only limited concern about a substantial growth slowdown and some acknowledgement that AI-related repricing and demand cooling could modestly temper activity.
The FXS Fed Sentiment Index rose by 0.95 points to 143.10, firmly in hawkish territory and consistent with the above-baseline FXS Speechtracker reading. This move signals that markets should interpret Daly’s remarks as incrementally hawkish for the Dollar, with elevated odds of further policy tightening remaining in focus.
Technical Analysis: AUD/USD keeps a bearish vibe under the 100-day SMA
In the daily chart, AUD/USD extends its decline with a clear bearish bias as spot holds below all key moving averages and the entire Bollinger envelope. The 20-period simple moving average (SMA) from the Bollinger Bands and the 100-day SMA, reinforces a topside cap, while the Relative Strength Index (14) near 33 suggests lingering downside pressure, though approaching oversold territory.
On the topside, initial resistance emerges at the lower Bollinger Band around 0.6875, with the Bollinger midline at 0.6985 acting as the next hurdle before the 100-day SMA near 0.7025 and the upper Bollinger Band at 0.7090. As no meaningful support levels are evident below the current price in this framework, a sustained break back above 0.6875 would be the first signal that sellers are losing immediate control, while failure to do so keeps the door open for further weakness.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Australian Dollar FAQs
One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.
The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.
China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.
Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
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