AUD/USD climbed to around 0.6550 on Friday, up 0.30%, as stronger-than-expected Australian labor data boosted demand for the Aussie. The latest ABS report showed the Unemployment Rate dropping to 4.3% in October from 4.5%, alongside a solid 42.2K increase in employment—driven by 55.3K new full-time positions.
These results exceeded expectations and reinforce the case for a cautious stance from the Reserve Bank of Australia. Deputy Governor Andrew Hauser noted this week that policy may still be restrictive, underscoring the RBA’s measured approach.
China data adds further support
Fresh Chinese economic data also helped lift the Australian Dollar. Retail Sales grew 2.9% YoY in October, beating expectations, while Industrial Production expanded 4.9% YoY. Although Fixed Asset Investment came in slightly softer, the overall resilience in domestic demand remains supportive for Australia, given its deep trade links with China.
US dollar struggles as data uncertainty persists
The US Dollar continues to lose traction despite the government’s reopening. Ongoing uncertainty over delayed economic data is weighing on sentiment, with several federal agencies unable to collect key statistics during the shutdown. This raises the possibility that October’s CPI and other indicators may be postponed or never released.
The policy outlook remains clouded. While the probability of a December Fed rate cut hovers near 50%, recent Fed commentary reflects a cautious tone. Officials continue to balance signs of persistent inflation with evidence of a cooling labor market, including softer ADP job creation and rising layoffs reported by Challenger.
With the Greenback struggling to regain momentum, the backdrop remains supportive for AUD/USD in the near term.
