The Australian Dollar (AUD) is holding steady against the US Dollar (USD) on Friday after two consecutive sessions of losses. The AUD/USD pair came under pressure earlier this week as the Greenback strengthened on upbeat US economic data, while risk aversion also weighed on the Aussie after US President Donald Trump threatened a 100% tariff on patented or branded pharmaceutical imports starting October 1, unless production facilities are established in the US.
Australian inflation tempers RBA rate cut bets
Australia’s Monthly Consumer Price Index (CPI) accelerated to 3.0% year-over-year in August, up from 2.8% in July, reducing expectations of near-term easing from the Reserve Bank of Australia (RBA). The ASX 30-Day Interbank Cash Rate Futures now price only a 4% chance of a September cut, while Reuters reported that odds of a November cut have slipped to 50% from nearly 70% prior to the data. RBA Governor Michele Bullock noted this week that labor market conditions have softened slightly but stressed that the central bank must remain vigilant and ready to adjust policy if needed.
US data and Fed commentary in focus
The US Dollar Index (DXY) is trading near 98.40 as traders await August’s Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve’s preferred inflation gauge, later on Friday. Recent US data highlighted robust momentum: Q2 GDP expanded at an annualized pace of 3.8%, above the 3.3% estimate, while jobless claims fell to 218K, the lowest since July.
Fed policymakers remain divided on the path ahead. Chicago Fed President Austan Goolsbee expressed caution on easing while inflation stays above target, whereas Governor Stephen Miran advocated for a more aggressive 0.50% cut to safeguard the labor market. Kansas City Fed President Jeffrey Schmid backed easing to support employment, and San Francisco Fed President Mary Daly said further cuts will likely be needed. Chair Jerome Powell reiterated that the Fed is prioritizing labor market weakness over lingering inflation concerns, signaling flexibility in the policy outlook.
Meanwhile, S&P Global PMI data suggested some loss of momentum across the US economy, with Composite PMI easing to 53.6 in September from 54.6, while both manufacturing and services activity softened.
Bilateral ties in focus
The White House confirmed that Australian Prime Minister Anthony Albanese will meet US President Donald Trump in Washington on October 20, with the Aukus nuclear submarine pact high on the agenda.
Australia’s preliminary PMI data showed slowing domestic activity, with the Composite reading falling to 52.1 in September from 55.5, its lowest in three months. Both manufacturing and services sectors reported weaker demand and slower growth.
Technical outlook for AUD/USD
The AUD/USD pair trades around 0.6530 on Friday, remaining below the nine-day Exponential Moving Average (EMA) and the 50-day EMA at 0.6550. Momentum indicators reflect a bearish bias, with the 14-day Relative Strength Index (RSI) below the 50 mark.
On the downside, support is seen at 0.6483, the monthly low from September 2, followed by 0.6414, the three-month low recorded on August 21. A sustained break below these levels could accelerate losses.
Resistance sits at the 50-day EMA of 0.6550, followed by the nine-day EMA at 0.6581. A decisive move above these levels would improve near-term sentiment and potentially open the way toward the 11-month high of 0.6707, reached on September 17.
