AUD/USD Firms at $0.6640 as RBA Signals Hawkish Path and Fed Cut Bets Grow
AUD/USD is trading around $0.6640 in Asian hours, supported by the Reserve Bank of Australia’s firm policy stance.
Quick overview
- AUD/USD is trading around $0.6640, supported by the RBA's firm policy stance and no near-term rate cuts expected.
- Inflation in Australia remains above the RBA's target, providing a yield advantage for the Aussie dollar.
- The upcoming labor market report is anticipated to show a modest increase in jobs and a rise in unemployment to 4.4%.
- The US Dollar is weakening as expectations for a Fed rate cut grow, further favoring the Australian dollar.
AUD/USD is trading around $0.6640 in Asian hours, supported by the Reserve Bank of Australia’s firm policy stance. Governor Michele Bullock reiterated that the RBA sees no justification for near-term rate cuts, and even outlined scenarios that could require renewed tightening in 2026. With inflation still above the RBA’s 2%–3% target band, investors view Australia as one of the few major economies unlikely to move toward rapid monetary easing—giving the Aussie a relative yield advantage.
Attention now turns to Australia’s November labor market report, where economists expect around 20,000 new jobs versus 42,200 previously, with unemployment projected to rise to 4.4%. A steady labor market would reinforce the RBA’s conviction that prematurely loosening policy risks reigniting price pressures.
Australian Dollar Drivers
- RBA signals no near-term cuts
- Inflation remains above target, limiting easing
- Labor market expected to stay broadly resilient
US Dollar Softens After Mixed Labor Signals
The US Dollar continues to weaken as expectations for a 25 bp Fed rate cut solidify ahead of Wednesday’s decision. The latest PCE data showed core inflation at 2.8% YoY, consistent with a gradual cooling trend across the economy. Markets now price in roughly a 90% probability of a cut.
Labor indicators offered little support for the dollar. The ADP Weekly Employment Change improved to 4.8K from –13.5K, but the modest rebound failed to alter expectations for softer hiring. JOLTS job openings stood at 7.67M, above forecasts, yet not strong enough to stop markets from leaning toward easing.
With the Fed preparing to lower rates and the RBA maintaining a restrictive tone, the policy gap continues to tilt in favor of the Australian dollar.
AUD/USD Technical Analysis
AUD/USD is hovering near $0.6640, holding inside an ascending channel that’s guided price higher since late November. Candlesticks continue to form higher lows along the channel’s lower boundary, showing buyers are still defending trendline support at $0.6629. The 20-EMA at $0.6636 has flattened, signaling slower momentum without shifting the trend.
Resistance remains firm at $0.6653, where repeated upper-wick rejection shows hesitation. A clear break above that level would open the way toward $0.6677 and the channel top near $0.6702.
On the downside, a close below $0.6629 would weaken the structure and expose $0.6602, followed by $0.6574. RSI near 55 reflects modest bullish pressure without overextension.
As long as AUD/USD stays inside the rising channel, the short-term bias remains constructive.
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