Aussie dollar steadies near multi-month highs as RBA hawkish tone
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Daily Currency Update
The AUD/USD pair regained positive momentum on Friday after a choppy trading session the previous day, holding comfortably above the mid-0.6600 level during Asian trading hours. The pair remains close to its highest point since September 17, reached earlier this week, and appears on track to post gains for a third consecutive week. The broader fundamental backdrop continues to provide solid support for the Australian dollar, keeping buyers engaged despite some near-term data volatility.One of the key drivers underpinning the Aussie is the Reserve Bank of Australia’s increasingly hawkish messaging. Earlier this week, the RBA left its benchmark interest rate unchanged, in line with market expectations. However, the accompanying commentary struck a firmer tone than many investors had anticipated. RBA Governor Michele Bullock noted that the Board had actively discussed the possibility of further rate hikes should inflation risks re-emerge. She also indicated that the need for additional rate cuts appears unlikely at this stage, reinforcing the view that monetary policy will remain restrictive for longer.
These remarks helped bolster confidence in the Australian dollar, offsetting the impact of mixed domestic employment data released on Thursday. While the labor market figures showed some signs of cooling, they were not weak enough to materially shift expectations around RBA policy. As a result, traders appear to be placing greater weight on the central bank’s determination to keep inflation under control rather than short-term fluctuations in economic data.
The hawkish tilt from the RBA stands in contrast to growing speculation that other major central banks, including the US Federal Reserve, may move closer to easing policy in the coming months. This divergence in outlook has helped narrow interest rate differentials in favor of the Australian dollar, lending additional support to the AUD/USD pair.
From a technical perspective, the pair’s ability to hold above key support levels and remain near multi-month highs suggests that the underlying bullish trend remains intact. The recent rally, which has unfolded over the past three weeks, reflects improving sentiment toward risk-sensitive currencies and a reassessment of Australia’s monetary policy outlook.
Looking ahead, market participants will continue to monitor incoming economic data and central bank commentary for further direction. However, as long as the RBA maintains its firm stance and global risk appetite remains stable, the AUD/USD pair appears well-positioned to extend its recent upward move and maintain its constructive tone in the near term.
Key Movers
The US Federal Reserve took another step toward easing monetary policy last week, announcing a quarter-percentage-point reduction in its benchmark interest rate. The decision, delivered on Wednesday, lowered the target range to 3.50%–3.75% and marked the third consecutive rate cut this year. The move was widely anticipated by markets and reflects the central bank’s growing confidence that inflation pressures are easing while economic growth shows signs of moderation.Speaking at the post-meeting press conference, Fed Chair Jerome Powell struck a measured and cautious tone. He noted that the US central bank is now “well positioned to wait and see how the economy evolves,” signaling a shift away from aggressive policy action in the near term. Powell’s remarks suggested that policymakers are comfortable pausing to assess incoming data before making further adjustments. Supporting this view, updated projections from Fed officials indicated expectations for just one additional quarter-percentage-point rate cut in 2026, reinforcing the idea that the bulk of policy easing may already be behind us.
Meanwhile, recent US labor market data has added to speculation that economic momentum may be slowing. On Thursday, the US Department of Labor reported that weekly Initial Jobless Claims rose to 236,000 for the week ending December 6. This figure exceeded market expectations of 220,000 and represented a sharp increase from the previous week’s revised reading of 192,000. Notably, the latest jump marked the largest weekly rise in jobless claims since mid-July 2021.
The unexpected surge in claims has raised concerns about potential softening in the US labor market, which has long been a key pillar of economic resilience. As a result, the data triggered some selling pressure on the US dollar, as investors reassessed the outlook for growth and interest rates. A cooling labor market could strengthen the case for maintaining a more accommodative policy stance, particularly if similar trends persist in upcoming employment reports.
Looking ahead, the US economic calendar is relatively quiet on Friday, with no major market-moving data releases scheduled. In the absence of fresh economic indicators, the US dollar is likely to take its cues from speeches by influential members of the Federal Open Market Committee (FOMC). Any hints regarding future policy direction or assessments of economic conditions could influence short-term currency movements.
Beyond central bank commentary, broader market sentiment will also play a key role in shaping demand for the US dollar. Shifts in risk appetite, driven by global economic developments or financial market volatility, could create short-term trading opportunities. For now, the combination of recent rate cuts, softer labor data, and a cautious Fed outlook leaves the US dollar sensitive to incoming signals as markets look for clarity on the next phase of monetary policy.
Expected Ranges
- AUD/USD: 0.6500 - 0.6700 ▲
- AUD/EUR: 0.5550 - 0.5750 ▲
- GBP/AUD: 2.0100 - 2.0300 ▼
- AUD/NZD: 1.1300 - 1.1400 ▼
- AUD/CAD: 0.9000 - 0.9200 ▲