The Australian Dollar (AUD) traded weaker against the US Dollar (USD) on Friday, with AUD/USD extending its losses for a third consecutive session. The pair is on track to post its first weekly decline in four weeks as the Greenback’s post-Fed recovery curbs demand for risk-sensitive currencies.
At the time of writing, AUD/USD hovers near 0.6597, its lowest level in almost two weeks, after reversing from Wednesday’s peak—the highest since October 2024—set immediately after the Federal Reserve’s (Fed) policy announcement.
Fed signals cautious stance, lifts US Dollar
The Fed lowered the federal funds rate by 25 basis points to a range of 4.00%–4.25%, in line with market expectations. However, Chair Jerome Powell’s post-meeting remarks dampened dovish hopes. He described the cut as a “risk-management” step to support a softening labor market and stressed that policy is “not on a preset course,” reinforcing a cautious, data-dependent approach.
Adding to the debate, new Fed Governor Stephen Miran said he represented the “bottom dot” in the Fed’s latest projections, advocating for deeper cuts to safeguard employment. He argued that even a 50 bps reduction would not have unsettled markets and urged colleagues to consider a faster pace of easing.
Weak Australian jobs data adds pressure on AUD
Domestic data further weighed on the Aussie. Australia’s August labor market report showed employment unexpectedly fell by 5.4K, against forecasts for a 22K gain. Full-time jobs tumbled by 40.9K, partly offset by a 35.5K increase in part-time positions. The participation rate slipped to 66.8% from 67.0%, while the unemployment rate held steady at 4.2%.
