AUD/USD advances to approximately 0.6955 in the early session on Monday. US Nonfarm Payrolls underperformed relative to expectations in September. Markets anticipate that the RBA will probably maintain its current interest rates during the upcoming November policy meeting. The AUD/USD pair advances to approximately 0.6955 in the early Asian session on Monday. Weaker-than-expected US jobs data exerts downward pressure on the US Dollar relative to the Australian Dollar. Traders are anticipating the forthcoming release of the US ISM Services Purchasing Managers Index report later on Monday. Data released by the US Bureau of Labour Statistics on Friday indicated that Nonfarm Payrolls increased by 29,000 jobs in September, following a revised figure of 133,000 for August, down from the previously reported 162,000. This figure came in below the market consensus of 90,000. Anticipations regarding a Federal Reserve interest rate increase later this month diminished following the release of weaker US employment figures. Markets currently reflect a probability of approximately 22.1% for a Federal Reserve rate hike in October, alongside an 87.2% likelihood of an increase in December, as indicated by the CME FedWatch Tool.
On the Australian front, the likelihood of the Reserve Bank of Australia increasing interest rates in November has diminished significantly following the recent Consumer Price Index data, which aligned with forecasts. Money markets are currently anticipating that the Australian central bank will probably maintain rates at their current level during the November policy meeting. The likelihood of an increase in rates has decreased to approximately 20%, according to data from LSEG. Analysts argue that the latest data underscore why “1.5 additional rate hikes by the RBA – as the market was still expecting yesterday – are likely to be too much.” One day after the Reserve Bank of Australia’s monetary policy meeting, they note that the CPI figures released today “also show” the case for caution, even though “there’s no question that inflation is still too high, and it will take a while before it returns to the middle of the target range.” Commerzbank stresses that “interest rate hikes always take effect with a certain time lag,” and points in particular to the real estate sector, “where building permits fell again in August by 6.1% compared to the previous month and prices in the largest cities continue to decline.” Against this backdrop, the bank judges that “the RBA would likely be well advised to wait and see how things develop in the coming months.” In turn, they conclude that “the AUD is unlikely to receive any further tailwind.”
Fed’s Logan delivered a notably more hawkish message, with the FXS Speechtracker score at 9.2/10, significantly exceeding the historical average of 8.1/10, highlighting a pronounced tightening bias in comparison to the established baseline. The emphasis that higher yields may reflect increased term premiums, potentially reducing the need for further aggressive tightening, aligns with explicit calls for at least 50 bps more in rate hikes and several additional moves. This reinforces the view that policy is not yet restrictive enough and that inflation will not reach 2% without higher rates, a mix that is broadly supportive for the Dollar. Overall, the speech conveys a strong sense of confidence in economic expansion and a well-balanced labour market, while distinctly emphasising the need to restore price stability through further tightening measures. The FXS Fed Sentiment Index increased by 1.68 points to 136.59, indicating a significant shift further into hawkish territory and corresponding with the heightened FXS Speechtracker reading. With the index significantly exceeding the neutral 100 mark, this data point bolsters expectations for additional policy rate hikes and supports the Dollar against the Euro and Yen.
In the daily chart, AUD/USD maintains a bearish near-term outlook as the spot remains below the 100-day simple moving average and the Bollinger middle band SMA. Price is currently positioned within the lower half of the recent volatility envelope, while the Relative Strength Index (14) at 31.5 remains just above the oversold threshold, suggesting that while downside momentum continues to prevail, it is becoming increasingly extended. On the topside, initial resistance is observed at the 100-day SMA at 0.7055, followed by the Bollinger middle band around 0.7070; a daily close above these levels would be necessary to alleviate immediate selling pressure prior to encountering the next barrier at the Bollinger upper band near 0.7250. On the downside, the Bollinger lower band at 0.6895 presents the initial significant support level, and a failure to maintain this could pave the way for new lows within the ongoing bearish trend.
