The Australian Dollar (AUD) traded flat against the US Dollar (USD) on Friday, as traders digested a mix of US inflation and business activity data that left market sentiment divided. At the time of writing, AUD/USD trades around 0.6511, stabilizing after intraday volatility triggered by the latest US Consumer Price Index (CPI) and S&P Global Purchasing Managers Index (PMI) releases.
Aussie trims gains as US business activity offsets soft inflation
The Greenback briefly weakened earlier in the session after softer-than-expected inflation data boosted the Aussie. However, the move quickly reversed as stronger US PMI figures highlighted continued resilience in the American economy. The US Dollar Index (DXY), which measures the dollar’s performance against six major peers, hovered around 99.00, up roughly 0.4% for the week.
According to the US Bureau of Labor Statistics (BLS), headline CPI rose 0.3% month-on-month in September, below expectations of 0.4% and easing from August’s 0.4% increase. On an annual basis, inflation climbed 3.0%, undershooting the 3.1% forecast but edging slightly higher than August’s 2.9%. Core CPI — which excludes food and energy — rose 0.2% MoM and 3.0% YoY, both softer than projected.
The data reinforced expectations that the Federal Reserve will maintain its dovish trajectory following September’s rate cut. Markets are fully pricing in another 25-basis-point reduction at the October 29–30 policy meeting.
Meanwhile, S&P Global’s flash PMI data painted a more upbeat picture. The Composite PMI rose to 54.8 in October from 53.9 previously, marking the fastest pace of private-sector growth in three months. The Services PMI advanced to 55.2, while the Manufacturing PMI ticked higher to 52.2 — both signaling solid expansion.
However, consumer sentiment remained a weak spot. The University of Michigan’s (UoM) final October reading showed sentiment slipping to 53.6 from a preliminary 55.0, while the Expectations Index fell to 50.3 from 51.2. Inflation expectations were mixed, with the 1-year outlook steady at 4.6% and the 5-year measure climbing to 3.9% from 3.7%.
Technical outlook: aussie consolidates with slight bearish bias
From a technical standpoint, AUD/USD is moving sideways within a narrow 0.6480–0.6520 range following a Head-and-Shoulders breakdown on the daily chart. The pair remains below the 21-day, 50-day, and 100-day moving averages, underscoring a mild bearish bias. The Relative Strength Index (RSI) sits near 45, reflecting a neutral tone as momentum balances between buyers and sellers.
Immediate support is located at 0.6480, with a break below that level opening the door toward 0.6450 and the August 22 low at 0.6415. On the upside, resistance is seen near 0.6535, followed by 0.6560 — a daily close above which could neutralize the bearish setup and expose the 0.6600 zone.
