Australian dollar rises on hawkish RBA comments and persistent inflation
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Daily Currency Update
The Australian dollar (AUD) advanced against the US dollar (USD) on Monday, with the AUD/USD pair appreciating toward US$0.6538, up 0.45% for the day, at the time of writing. The local currency gained traction after Reserve Bank of Australia (RBA) Deputy Governor, Andrew Hauser, reiterated the central bank’s commitment to maintaining a restrictive monetary policy stance until inflation moves sustainably back within target.Hauser’s remarks reinforced expectations that the RBA may keep interest rates higher for longer, providing support to the Australian dollar amid persistent price pressures. Speaking at an event in Sydney, he emphasised that the central bank’s job is “not yet done” and that policy settings must remain tight to prevent inflation expectations from becoming unanchored.
Recent economic data lend weight to Hauser’s argument. According to the Australian Bureau of Statistics (ABS), headline inflation accelerated by 1.3% in the third quarter of 2024, up from 0.7% in the previous quarter. The year-over-year figure stood at 3.9%, underscoring the ongoing challenge facing policymakers. The data showed that much of the upward pressure stemmed from services inflation, particularly in housing, insurance and education, alongside renewed increases in energy costs.
The persistence of inflation, especially in non-tradable sectors, suggests that domestic demand remains resilient despite higher borrowing costs. Market participants now see an increased likelihood that the RBA could extend its tightening bias or delay rate cuts well into 2026, diverging from the more dovish outlooks in other advanced economies.
Technically, AUD/USD faces initial resistance near US$0.6530, followed by US$0.6560, while support lies around US$0.6480. A sustained break above current levels could open the door to further gains if the RBA’s hawkish stance continues to contrast with the Fed’s evolving dovish tone.
Overall, the Australian dollar’s upward momentum reflects both RBA policy resilience and waning USD strength, positioning the AUD/USD pair for potential near-term upside amid shifting global monetary dynamics.
Key Movers
The US Dollar Index (DXY) traded slightly higher around 99.65 during Asian hours on Monday, extending a cautious rebound as investors grew more optimistic that the ongoing US government shutdown could be resolved soon. The index’s modest gains came even as markets grappled with mounting uncertainty surrounding the country’s economic data blackout, now stretching into its second month.The US dollar’s performance has been caught between improving sentiment over a potential budget breakthrough and growing anxiety about the absence of key economic indicators. The latest blow came with news that the November Non-Farm Payrolls (NFP) report has been cancelled once again due to the government shutdown. The cancellation marks the second consecutive month without an official employment report, one of the most closely watched gauges of economic health and a vital input for the Federal Reserve’s policy decisions.
Without access to official data, traders and analysts have been relying on private-sector surveys such as ADP’s employment report, ISM business indices and various labour market trackers to estimate the economy’s performance. However, these substitutes lack the credibility, comprehensiveness and market-moving impact of government releases. The resulting information gap has deepened the sense of uncertainty in financial markets, leaving participants hesitant to take strong directional positions on the US dollar.
Meanwhile, expectations for the Federal Reserve’s next policy steps remain fluid. Some investors believe the extended data blackout could prompt the Fed to adopt a more cautious stance in upcoming meetings, emphasising flexibility until official figures resume. Others argue that signs of resilient private hiring and steady consumer activity may encourage policymakers to maintain their current restrictive bias a bit longer.
Broader sentiment in currency markets also remain influenced by developments in Washington. If negotiations to end the shutdown show tangible progress, the DXY could find additional near-term support, as reduced political risk often helps underpin the US dollar. Conversely, prolonged stalemates could weigh on investor confidence and renew downward pressure.
In the short term, traders are watching technical levels near 99.80 as initial resistance and 99.30 as immediate support. Until clarity returns on both fiscal negotiations and official data releases, the US dollar’s path is likely to remain range-bound and sentiment-driven, with volatility spikes tied closely to news headlines out of Washington.
Expected Ranges
- AUD/USD: 0.6400 - 0.6600 ▲
- AUD/EUR: 0.5550 - 0.5750 ▲
- GBP/AUD: 2.0100 - 2.0300 ▼
- AUD/NZD: 1.1450 - 1.1650 ▲
- AUD/CAD: 0.9050 - 0.9250 ▼