Aussie dollar slips below US$0.65 as Fed tone firms and RBA caution weighs
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Daily Currency Update
AUD/USD is trading near US$0.6480 at the time of writing, slipping back below the US$0.65 mark as momentum softens. The Australian dollar (AUD) is losing some ground against the US dollar (USD), giving up part of last week’s gains as markets rapidly rethink the outlook for Federal Reserve (Fed) policy.Over the past several sessions, the USD has found renewed support after several Fed officials emphasised that current monetary policy remains “restrictive.” Their comments have dampened hopes for a December rate cut, prompting investors to scale back expectations that the Fed might ease sooner rather than later.
On the Australian side, the bullish mood from last week’s stronger-than-expected labour data is starting to fade. The latest report from the Australian Bureau of Statistics showed the Unemployment Rate dropping to 4.3% in October, along with a 42.2K rise in employment change. Notably, most of these gains came from an increase in full-time positions, typically a sign of healthy underlying demand in the labour market.
While the data initially lifted the Aussie, it also strengthened the case for the Reserve Bank of Australia (RBA) to maintain a cautious approach in the months ahead. Market pricing reflects this sentiment. According to the ASX 30-Day Interbank Cash Rate Futures for December 2025, traders see only a 6% probability of a rate cut from 3.60% to 3.35%, based on ASX’s RBA Rate Tracker. In other words, markets are signalling that any policy easing from the RBA still looks distant.
Looking ahead, traders are turning their attention to the RBA’s November meeting minutes, set to be released on Tuesday. The central bank left interest rates unchanged at 3.6% during that meeting, highlighting concerns that inflation remains uncomfortably high. These minutes may offer more clarity on how policymakers are viewing the balance between persistent price pressures and a softening economic outlook. Adding to the cautious tone, RBA Deputy Governor Andrew Hauser recently underscored that current policy remains “mildly restrictive.” His remarks suggested that there is ongoing internal debate over whether policy settings are tight enough to guide inflation back toward target. This uncertainty has contributed to a more defensive stance for the AUD as markets await fresh insights from the central bank.
Overall, with the Fed signalling patience, the RBA striking a careful tone and markets adjusting expectations on both sides, AUD/USD may remain somewhat vulnerable in the near-term. Traders will be watching economic releases and central bank commentary closely as they reassess the pair’s direction heading into the final weeks of the year.
Key Movers
In the United States, financial markets are gearing up for a busy week as traders brace for a wave of delayed economic data following the end of the government shutdown. One of the most closely watched releases is the September Non-farm Payrolls (NFP) report, is now scheduled for November 20, but uncertainty remains around several other indicators. Because many federal agencies were unable to collect or process information during October, some data for that month may not be published at all. Kevin Hassett, Director of the US National Economic Council, even cautioned that certain October figures may “never be produced,” leaving analysts with limited visibility into the most recent economic trends.At the same time, the US dollar has drawn support from a series of comments by Federal Reserve officials, which have collectively pushed back against expectations for near-term policy easing. Kansas City Fed President Jeffrey Schmid remarked that monetary policy needs to “lean against demand growth,” describing the current stance as “modestly restrictive.” His tone suggested little urgency to lower rates while consumption and hiring remain relatively firm. Similarly, St. Louis Fed President Alberto Musalem noted that interest rates are edging closer to neutral levels, but he also emphasised that cutting them prematurely could risk reigniting inflation pressures. Minneapolis Fed President Neel Kashkari added another layer of caution, pointing out signs of strain in parts of the labor market while noting that inflation remains too high at around 3%, still above the Fed’s 2% target. Together, these remarks have encouraged investors to dial back expectations for a December rate cut. Market pricing reflects the shift in sentiment. According to the CME FedWatch Tool, the probability of a 25-basis-point cut in December has dropped sharply to 46%, down from 67% just one week earlier. That adjustment highlights how sensitive rate expectations remain to both economic data and Fed communication.
Adding to the USD's support, the latest reading of the New York Empire State Manufacturing Index surprised to the upside. The index came in at 18.7 for November, significantly higher than the consensus forecast of 6 and well above the previous reading of 10.7. This stronger-than-expected result suggests that pockets of the US economy, particularly in manufacturing continue to show resilience, even amid mixed signals elsewhere.
As traders navigate the days ahead, the combination of delayed data, cautious but firm Fed messaging and signs of economic strength is likely to keep the USD on steady footing. With uncertainty still hanging over the October data gap, market participants will be watching upcoming releases and Fed commentary even more closely than usual.
Expected Ranges
- AUD/USD: 0.6400 - 0.6600 ▼
- AUD/EUR: 0.5500 - 0.5700 ▼
- GBP/AUD: 2.0200 - 2.0400 ▲
- AUD/NZD: 1.1400 - 1.1600 ▼
- AUD/CAD: 0.9000 - 0.9200 ▼