The Australian dollar (AUD) edged lower against the US dollar (USD) on Tuesday, with AUD/USD trading around 0.6530 at the time of writing, down 0.15% on the day.
The pair retreated after touching a weekly high near 0.6540 on Monday, as traders adopted a cautious stance ahead of a key vote in the US House of Representatives on a short-term government funding bill.
RBA’s hawkish tone supports the Aussie
The Aussie remains underpinned by the Reserve Bank of Australia’s (RBA) firm policy stance. Deputy Governor Andrew Hauser warned on Monday that cutting rates too soon could reignite inflationary pressures, highlighting the resilience of Australia’s economic recovery. He reaffirmed that maintaining tight policy conditions remains essential to ensure inflation returns sustainably to target.
Supporting that message, the latest Westpac Consumer Confidence Index surged 12.8% to 103.8 in November the largest jump in seven years. The improvement was driven by a brighter outlook for household finances and a moderation in price pressures, reinforcing optimism that the domestic economy can withstand higher interest rates for longer.
US fiscal progress offers limited lift to the greenback
In the United States, markets remain focused on the political effort to resolve the prolonged government shutdown. The Senate passed a temporary funding bill on Monday to reopen the federal government after more than 40 days of closure, though traders await final approval by the House of Representatives before increasing exposure to risk assets.
Meanwhile, the US dollar has held broadly steady, supported by market bets that the Federal Reserve (Fed) will deliver a rate cut in December as signs of labor market softness persist.
Looking ahead, developments surrounding the US fiscal situation and upcoming remarks from Fed officials are expected to drive AUD/USD sentiment through the remainder of the week.
