The Australian Dollar (AUD) holds steady against the US Dollar (USD) on Monday ahead of this week’s key inflation release. Traders are focused on Australia’s first “complete” monthly CPI report for October, due Wednesday, which is expected to offer clearer guidance on the Reserve Bank of Australia’s (RBA) policy outlook.
The AUD/USD pair finds support as markets lean toward an expectation of a cautious RBA. Minutes from the November meeting signaled the central bank may keep rates unchanged for an extended period. ASX 30-Day Interbank Cash Rate Futures showed that as of November 20, the December 2025 contract traded at 96.41, implying just a 6% probability of a rate cut to 3.35% from 3.60% at the upcoming RBA decision.
RBA Assistant Governor Sarah Hunter noted on Thursday that “sustained above-trend growth could fuel inflationary pressures.” She emphasized that monthly CPI prints can be volatile and that the RBA will not react to a single data point. Hunter added that the central bank is closely monitoring labor-market conditions to assess supply capacity while examining how transmission effects of monetary policy may be evolving over time.
US Dollar slides as Fed rate-cut bets resurface
The US Dollar Index (DXY) is retreating after a five-day winning streak, trading near 100.10 at the time of writing. Renewed expectations for a December rate cut are weighing on the Greenback.
According to the CME FedWatch Tool, markets are now pricing in a 69% chance of a 25 basis-point (bps) rate cut at the December meeting, rising from 44% just one week earlier.
New York Fed President John Williams said Friday that policymakers could still consider cutting rates in the “near-term,” boosting bets on a move next month. Fed Governor Stephen Miran added that recent Nonfarm Payrolls data supports a December cut, noting that if his vote were decisive, he “would vote for a 25-bps cut.”
Consumer sentiment data was mixed. The University of Michigan’s (UoM) Consumer Sentiment Index rose to 51 in November from a preliminary 50.3, beating forecasts but falling short of October’s 53.6. Inflation expectations improved, with the one-year outlook easing to 4.5% from 4.7% and the five-year view declining to 3.4% from 3.6%.
Nonfarm Payrolls (NFP) rose by 119,000 in September, beating expectations of 50,000 and marking a solid rebound from August’s revised 4,000 decrease. The unemployment rate ticked up to 4.4%, while Average Hourly Earnings were unchanged at 3.8% YoY.
FOMC Minutes from the October 28–29 meeting revealed a divided committee. Most participants anticipated that further rate cuts would likely be appropriate over time, though several policymakers did not necessarily see a December move as warranted.
Australia’s preliminary PMI figures for November showed improvement, with Manufacturing PMI rising to 51.6 from 49.7, Services PMI increasing to 52.7 from 52.5, and Composite PMI strengthening to 52.6 from 52.1. The RBA’s November meeting minutes highlighted a more balanced stance, suggesting the board may keep the cash rate unchanged for longer if incoming data proves stronger than expected.
Australian Dollar hovers near 0.6450 within a consolidation phase
The AUD/USD pair is trading around 0.6450 on Monday, with the daily chart showing a sideways pattern within a rectangular consolidation range. Price action remains below the nine-day Exponential Moving Average (EMA), indicating muted short-term momentum.
Immediate support lies at the lower boundary of the range near 0.6420, followed by the five-month low at 0.6414 from August 21.
On the upside, initial resistance sits at the nine-day EMA around 0.6481, followed by the psychological 0.6500 level. A break above this zone could strengthen bullish momentum and drive the pair toward the upper boundary of the rectangle near 0.6620.
