AUD Surge Continues as RBA Signals Pause While Fed Cuts Loom

Aussie Dollar Momentum Builds: Can it Crack 0.6600 on RBA Hold Bets?

The Australian Dollar is riding a winning streak, extending its fourth consecutive session of gains against the US Dollar as traders digest fresh economic data and reassess central bank trajectories. The AUD/USD pair is currently hovering around 0.6530, with market attention fixed on whether it can break through the key 0.6600 resistance level.

What’s Driving the AUD Rally

Strong economic signals out of Australia are giving the currency a lift. Private Capital Expenditure jumped 6.4% quarter-over-quarter in Q3—a meaningful acceleration from the prior quarter’s 0.2% gain and well ahead of the 0.5% consensus forecast. This robust business investment appetite suggests Australia’s economic engine is firing on multiple cylinders.

The plot thickened when Australia’s first official monthly Consumer Price Index came in hot at 3.8% year-over-year in October, beating expectations of 3.6% and the prior 3.5% reading. While this CPI print is still above the Reserve Bank of Australia’s 2-3% comfort zone, it paradoxically boosted AUD sentiment. Why? Markets see this as evidence the RBA likely won’t rush into aggressive rate cuts despite inflation still running warm.

The central bank is expected to keep the Official Cash Rate anchored at 3.6% through December, with futures markets pricing just a 6% chance of a 25-basis-point cut at the next meeting. RBA officials have emphasized that while unemployment has ticked up slightly, the job market remains fundamentally sound—a key pillar supporting their patient approach.

The USD Gets Pounded by Fed Rate-Cut Optimism

Meanwhile, the US Dollar is on its back foot. The DXY index, which measures the Greenback against six major counterparts, has slipped to around 99.50 as investors increasingly bet the Federal Reserve will pivot to rate cuts. The CME FedWatch Tool now shows markets pricing an 84% probability of a 25-basis-point cut in December—a dramatic jump from just 30% a week earlier.

What’s fueling this Fed pivot narrative? A combination of softening labor market signals and pivot-friendly nominees. Fed Governor Christopher Waller recently told Fox Business that the weakening employment picture is his primary worry, while inflation is “not a big problem.” New York Fed President John Williams reinforced the dovish drumbeat, saying rate cuts remain on the table for the “near-term.” Even more telling: Fed Governor Stephen Miran indicated he would vote for a December cut if given the choice.

On the data front, Initial Jobless Claims fell to 216,000 for the week ending November 22—better than the 225,000 expectation—but Fed officials seem more focused on the broader job market deterioration. Retail Sales rose just 0.2% month-over-month in September, a sharp slowdown from August’s 0.6% gain. Consumer Confidence also cratered, sliding 6.8 points to 88.7 as household sentiment shows real stress.

Technical Picture: AUD Consolidating for a Breakout

From a charting perspective, the AUD/USD pair is coiling within a rectangular consolidation zone, suggesting traders are caught between competing forces. The pair has punched above the nine-day Exponential Moving Average, signaling momentum has shifted to the upside in the near term.

If bulls can push through the upper boundary of the consolidation around 0.6630, the psychological 0.6600 level becomes the next logical target. By comparison, if we think about how 6000 EUR translates into AUD at current exchange rates, we’re looking at roughly 10,000+ AUD depending on the EUR/AUD cross—illustrating just how sensitive currency moves are to rate differentials between major central banks.

On the flip side, bears could find a foothold at the nine-day EMA around 0.6495, which aligns with the psychological 0.6500 support. A breakdown below that zone could send the pair toward the rectangle’s lower boundary near 0.6420, with the August 21 five-month low of 0.6414 looming as a potential floor.

The Bottom Line

The Australian Dollar’s rally reflects a fundamental divergence in monetary policy expectations: the RBA holding steady while the Fed prepares to cut. Incoming Australian PMI data—with Manufacturing at 51.6 and Services at 52.7 in November—shows economic activity remains resilient, supporting the RBA’s cautious hold stance. As long as this divergence persists and US labor market weakness piles up, the AUD should continue finding support against a weakening greenback. Watch that 0.6600 level closely; a clean break could open the door to fresh highs.