Will the Australian Dollar regain strength as RBA signals caution?

RBA’s balanced stance offers limited support for AUD amid wage data alignment

Australia’s Wage Price Index delivered no surprises in Q3, rising 0.8% quarter-on-quarter—matching both the previous quarter and market forecasts. On an annualized basis, wage growth remained steady at 3.4%, reinforcing expectations of a labor market cooling gradually. However, instead of igniting bullish momentum for the Australian Dollar, these neutral readings have left the AUD/USD pair struggling to hold ground, currently trading near 0.6490.

The culprit? The Reserve Bank of Australia’s recent November policy minutes unveiled a more guarded tone. RBA officials signaled readiness to maintain the current cash rate unchanged for an extended period, contingent on incoming economic data proving robust. Deputy Governor Andrew Hauser’s recent comments emphasizing that “monetary policy remains restrictive” suggest the board is in no rush to ease, despite dovish signals elsewhere globally. As of mid-November, derivatives markets price only an 8% probability of a December rate cut to 3.35%, indicating investors expect the RBA to hold firm.

Fed’s rate cut narrative fades, strengthening USD headwinds

Meanwhile, the US Dollar Index (DXY) maintains its dominance around 99.60, buoyed by a dramatic shift in Fed rate cut expectations. The CME FedWatch Tool now shows merely a 49% probability of a December rate reduction—down sharply from 67% just one week prior. This hawkish repricing reflects evolving Fed rhetoric and cooling labor market signals from recent data.

US Initial Jobless Claims reached 232,000 in the week ended October 18, with continuing claims climbing to 1.957 million. An ADP employment report revealed that private payrolls contracted by an average of 2,500 jobs weekly during the four weeks ending November 1. These softer employment figures would typically suggest rate cut tailwinds; however, Federal Reserve Vice Chair Philip Jefferson cautioned that labor market risks now dominate inflation concerns, advocating for a gradual rate reduction approach. Kansas City Fed President Jeffrey Schmid countered by arguing current policy remains “modestly restrictive” and appropriately tilted to “lean against demand growth.”

Such mixed messaging has kept the Greenback resilient. The USD’s strength creates a headwind for the Australian Dollar, which typically weakens when the dollar rallies.

Technical picture: AUD/USD consolidation near support

From a technical standpoint, the AUD/USD pair is consolidating within a rectangular trading range with bearish undertones. The currency pair remains below the nine-day Exponential Moving Average (EMA) at 0.6514, signaling continued downside pressure. Primary support sits at 0.6470 (rectangle base), with a deeper layer at the five-month low of 0.6414 from August 21.

Conversely, breaching the psychological 0.6500 level and the nine-day EMA would potentially reignite buying interest, targeting the rectangle’s upper boundary near 0.6630.

Market backdrop: Mixed signals across currency landscape

The Australian Dollar was the weakest performer against the Japanese Yen today, with AUD deprecating by 0.20% on a daily basis. This reflects broader risk-off sentiment and diverging monetary policy outlooks between central banks.

As currency markets remain fixated on Fed and RBA divergence, traders are closely monitoring employment reports, inflation prints, and central bank commentary. Whether the Australian Dollar can stabilize depends largely on the RBA maintaining its hawkish stance relative to the Fed’s eventual pivot—a dynamic that will continue to shape AUD strength throughout the remainder of the year.

For traders tracking broader crypto market correlations, the movement in AUD strength often precedes shifts in risk appetite that influence ethereum price in AUD terms, making currency pair momentum a useful leading indicator in the digital asset space.