Aussie dollar holds steady as markets weigh mixed cues
Written by
Daily Currency Update
The Australian dollar is trading close to US$0.6464 at the time of writing, little changed from Monday’s levels, as the pair continues to hover near last week’s three-month lows. The Australian dollar is showing signs of stability, yet it still faces difficulty attracting stronger buying interest while global sentiment remains cautious.Although the currency has found a foothold after recent declines, the broader mood in financial markets is preventing any meaningful upside momentum for now. Interestingly, this hesitation in the AUD comes despite a generally supportive domestic backdrop. Recent preliminary purchasing managers index (PMI) figures from Australia painted a more encouraging picture of the local economy. Manufacturing activity returned to expansion in November after a period of contraction, signalling that conditions for producers are gradually improving.
At the same time, services activity picked up for the second consecutive month, highlighting steady demand across Australia’s largest economic sector. These developments provide reassurance that the economy is holding up better than expected and, importantly, support the reserve bank of Australia’s decision to maintain a restrictive policy stance. However, even with these signs of resilience, the Australian dollar is struggling to fully benefit.
One of the main reasons is the renewed geopolitical uncertainty emerging in the Asia-pacific region. Concerns over regional tensions have prompted investors to adopt a more cautious approach, resulting in limited appetite for risk-sensitive currencies such as the AUD. When global risk sentiment turns softer, the US dollar tends to outperform due to its safe-haven appeal, and this dynamic is once again keeping AUD/USD under pressure.
In addition to geopolitical factors, traders are also waiting for further clarity from upcoming economic data releases in both Australia and the United States. Market participants are particularly focused on inflation indicators and labour-market updates that could influence the policy outlooks of the RBA and the federal reserve. With both central banks emphasising a data-dependent approach, each new figure has the potential to shift expectations and, in turn, drive currency movements. For now, the pair’s consolidation suggests that traders are not willing to take strong directional positions until there is more certainty. The recent improvement in Australian data may provide some underlying support, but the combination of global uncertainties and a firm US dollar continues to limit upside potential.
Looking ahead, AUD/USD is likely to remain sensitive to shifts in market sentiment, geopolitical developments and any signals from central bank officials. While the domestic picture in Australia appears more constructive, external forces may continue to play a dominant role in shaping the currency’s near-term direction.
Key Movers
The longest US government shutdown in history continues to ripple through the country’s economic data schedule, and the effects are becoming increasingly evident. One of the most significant consequences is the delay in crucial labour market reports normally published by the Bureau of Labor Statistics (BLS). Instead of releasing the October and November employment figures as planned, the agency has postponed them until December 16. This means the Federal Reserve will have to make its upcoming interest rate decision without access to some of the most important indicators it traditionally relies on. This lack of timely data adds an extra layer of uncertainty to the Fed’s already delicate policy considerations.Employment figures such as non-farm payrolls, the unemployment rate and wage growth typically play a central role in determining whether the central bank leans toward easing, tightening, or holding rates steady. Without them, policymakers are left navigating the economic landscape with an incomplete picture. For investors hoping that the Fed might move toward a rate cut in the coming weeks, the absence of fresh labour data could dampen those expectations. A central bank that feels uncertain is unlikely to make bold policy changes.
Against this backdrop, markets are shifting their attention to the US Producer Price Index (PPI), scheduled for release on Tuesday. Normally, PPI does not draw as much market-moving attention as the broader Consumer Price Index (CPI). However, with so much key data missing from the calendar, traders are grasping for any reliable indicator that can provide clues about inflation pressures and business costs. As a result, this month’s PPI release may carry more weight than usual in shaping near-term interest rate expectations and broader market sentiment.
Still, the usefulness of PPI data comes with important limitations. The index tracks price changes for goods and services produced domestically, intentionally excluding foreign-made or imported goods. This design means that PPI does not fully capture how external cost pressures such as tariffs, supply chain disruptions, or currency fluctuations are affecting US businesses. Given the Trump administration’s unpredictable and wide-ranging tariff strategy in recent years, this blind spot is especially noteworthy. Any tariff-driven increases in input costs for companies that rely heavily on imports will not show up directly in the PPI, though they may appear indirectly if firms pass those costs along through higher selling prices.
In the absence of comprehensive data, policymakers, investors and analysts will be forced to interpret the economic landscape with more caution than usual. Until the full labour market reports return on December 16, markets may remain sensitive to even small data releases, with uncertainty shaping both expectations and price movements across multiple asset classes.
Expected Ranges
- AUD/USD: 0.6350 - 0.6550 ▼
- AUD/EUR: 0.5500 - 0.5700 ▼
- GBP/AUD: 2.0200 - 2.0400 ▲
- AUD/NZD: 1.1400 - 1.1600 ▲
- AUD/CAD: 0.9000 - 0.9200 ▼