AUD holds steady as markets await key wage data for RBA guidance
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Daily Currency Update
The AUD/USD pair traded steadily on Tuesday, trading at US$0.6515 at the time of writing and showing little change from the previous session. Even with the quiet market tone, the Australian Dollar (AUD) continues to display a slight upward bias. This follows the release of the latest Reserve Bank of Australia (RBA) Minutes, which offered valuable insight into how policymakers are assessing the current economic environment. According to the Minutes, the RBA does not feel any immediate pressure to begin cutting the Official Cash Rate (OCR). From the central bank’s perspective, domestic demand remains stronger than expected, and inflation—while easing—continues to show sticky elements that require careful monitoring. While headline inflation has moderated from its peak, the persistence of price pressures in several key sectors means the RBA is not yet confident that inflation is moving sustainably back toward target. That said, the RBA is not ruling out the possibility of policy easing. Officials acknowledged that if Australia’s economic growth slows more sharply than anticipated, or if the labor market shows clear signs of weakening, a rate cut could be justified. This balanced messaging reinforces the bank’s data-driven approach: while it is maintaining a firm stance against inflation, it is also prepared to respond if economic conditions deteriorate. Investors are now looking ahead to one of the week’s most closely watched economic releases: the third-quarter Wage Price Index, due on Wednesday. Consensus forecasts point to a quarterly increase of 0.8% and an annual rise of 3.4%. These figures are especially important because wage growth plays a central role in shaping both consumer spending and inflation dynamics. A result that aligns with expectations would likely support the narrative that the RBA is in no rush to shift its policy stance. Moderate wage growth would suggest that, while the labor market remains relatively healthy, it is not generating the kind of rapid pay increases that might reignite inflation concerns. In this scenario, markets would likely continue to price in a slow and cautious path toward eventual rate cuts, rather than any swift policy pivot. For the AUD/USD pair, this environment creates a more stable backdrop. A steady RBA, combined with firm domestic demand, can help underpin the currency, particularly if upcoming data confirms the resilience of the Australian economy. However, global factors—such as broader US Dollar movements, risk sentiment, and commodity prices—will continue to influence day-to-day fluctuations. Overall, the Australian Dollar remains supported by a cautiously optimistic domestic narrative, while traders await further clues from Wednesday’s wage data to refine their expectations for the RBA’s next steps.Key Movers
The US Dollar (USD) remained on the back foot on Tuesday as traders assessed a series of mixed economic indicators released earlier in the day. While none of the data points were dramatic enough to spark sharp market moves, together they contributed to a broader narrative of a cooling US economy, reinforcing expectations that the Federal Reserve may be edging closer to policy easing. Labor market data, typically among the most influential for currency markets, continued to show signs of gradual softening. The latest ADP figures indicated that private-sector payrolls declined by an average of 2,500 jobs per week over the four weeks ending November 1. This followed an even steeper decline in the previous period, suggesting that hiring momentum is losing steam as businesses respond to higher borrowing costs and moderating demand. Although the declines are not yet alarming, they hint at a shift toward more cautious employment strategies. Weekly jobless claims added to the picture of a labor market that is becoming less tight. Initial Jobless Claims for the week of October 18 rose to 232,000, marking a slight increase that aligns with the broader trend of gradually rising unemployment filings. More importantly, Continuing Claims climbed to 1.957 million, reaching their highest levels in months. Rising continuing claims typically indicate that displaced workers are finding it more challenging to secure new employment, a sign that demand for labor is starting to soften. Meanwhile, the industrial sector offered a mixed but somewhat more encouraging update. Factory Orders for August rose by 1.4%, rebounding after a 1.3% contraction in July. However, the improvement failed to generate much market reaction, as investors viewed the rebound as modest rather than a signal of renewed manufacturing strength. Many analysts believe that factories are still grappling with uneven demand and lingering supply-chain adjustments, limiting the impact of monthly fluctuations. All of these data points arrive ahead of a key event on investors’ calendars: the release of the delayed September Nonfarm Payrolls (NFP) report, due Thursday. The NFP is typically one of the most closely watched indicators each month, and its delayed publication has only heightened anticipation. Market participants are hoping the report will provide clearer direction on the labor market’s underlying health and, by extension, the Federal Reserve’s near-term policy path. According to the CME FedWatch Tool, traders currently assign roughly a 43% probability to a 25-basis-point rate cut in December. This pricing reflects growing caution as signs of economic cooling accumulate. A weaker-than-expected NFP print could further boost expectations of a December cut, while a stronger reading might give the USD some temporary relief by tempering dovish bets. For now, the US Dollar remains pressured as markets await Thursday’s crucial data release, which could set the tone for Fed policy expectations into year-end.Expected Ranges
- AUD/USD: 0.6400 - 0.6600 ▲
- AUD/EUR: 0.5500 - 0.5700 ▲
- GBP/AUD: 2.0100 - 2.0300 ▼
- AUD/NZD: 1.1400 - 1.1600 ▼
- AUD/CAD: 0.9000 - 0.9200 ▲