The Australian Dollar (AUD) holds firm against the US Dollar (USD) on Friday as traders look past this week’s Reserve Bank of Australia and Federal Reserve (Fed) monetary policy announcements and reassess the near-term interest-rate outlook.
At the time of writing, AUD/USD is trading around 0.6656, stabilising after a short-lived dip toward 0.6632.
The Reserve Bank of Australia (RBA) held its cash rate steady at 3.60%, marking a third consecutive pause while signalling a cautious, data-dependent stance amid lingering inflation risks. By contrast, the Federal Reserve delivered a 25 basis point (bps) rate cut, lowering the Federal Funds Rate to the 3.50%-3.75% range, its third cut this year, reinforcing expectations that US monetary policy has entered a gradual easing phase.
Markets are now increasingly pricing in a prolonged pause from the RBA, with expectations building that the next policy move could be a rate hike in 2026 if inflation remains sticky. On the US side, traders continue to expect two rate cuts next year, despite limited forward guidance from the Fed.
This policy divergence continues to underpin the Aussie, keeping AUD/USD on track for a third consecutive weekly gain.
Earlier in the day, Comments from Fed officials showed continued caution around the policy outlook. Chicago Fed President Austan Goolsbee and Kansas City Fed President Jeffrey Schmid both dissented against this week’s rate cut. Goolsbee said he preferred to wait for greater clarity, particularly on inflation, before easing further, noting that recent data point to stable economic growth and only a moderate cooling in the labour market.
Schmid said that not much had changed since the previous meeting and added that monetary policy remains only modestly, if at all, restrictive, noting that the economy is showing momentum and that inflation remains too high.
With the key policy events now out of the way, market attention is shifting toward next week’s incoming economic data. Traders will closely watch the preliminary S&P Global PMIs from both Australia and the United States on Tuesday for fresh signals on economic momentum.
In the US, the spotlight will be on the Nonfarm Payrolls (NFP) reports for October and November, alongside Retail Sales on Tuesday and the Consumer Price Index (CPI) on Thursday.
Economic Indicator
Nonfarm Payrolls
The Nonfarm Payrolls release presents the number of new jobs created in the US during the previous month in all non-agricultural businesses; it is released by the US Bureau of Labor Statistics (BLS). The monthly changes in payrolls can be extremely volatile. The number is also subject to strong reviews, which can also trigger volatility in the Forex board. Generally speaking, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish, although previous months’ reviews and the Unemployment Rate are as relevant as the headline figure. The market’s reaction, therefore, depends on how the market assesses all the data contained in the BLS report as a whole.
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