- AUD/USD holds positive ground around 0.6339 in early Monday.
- US Core PCE eased to 3.7% YoY vs. 3.8% prior, the headline PCE remain unchanged at 3.4%.
- Markets anticipate the Reserve Bank of Australia (RBA) to raise the cash rate at its meeting on November 7.
- The Fed rate decision this week will be a closely watched event.
The AUD/USD pair kicks off the week in a positive mood below the mid-0.6300s during the early Asian session on Monday. The softer US Dollar (USD) lends some support to the pair. However, rising geopolitical tensions in the Middle East might trigger risk-aversion in the market and drag riskier assets like the Australia Dollar (AUD) lower. The pair currently trade around 0.6339, up 0.06% on the day.
The Federal Reserve (Fed) is expected to leave rates unchanged at the end of its two-day meeting on Wednesday. Late last month, Fed Chair Jerome Powell said that inflation is still too high, raising expectations for another rate hike by the end of the year. That being said, the higher for longer rate narratives in the US could lift the USD and act as a headwind for the AUD/USD pair.
On Friday, the Core Personal Consumption Expenditures Price Index (PCE), the Fed’s preferred gauge for inflation, eased to 3.7% YoY from 3.8% while the headline PCE remained unchanged at 3.4%. Additionally, the University of Michigan Consumer Index came in better than expected at 63.8 versus 63.0 prior. However, these figures failed to boost the Greenback against its rivals.
On the other hand, the recent Australian inflation figures were in line with policymakers' expectations and the markets anticipate the Reserve Bank of Australia (RBA) to raise the cash rate by 25 basis points (bps) to 4.35% in its meeting on November 7. RBA Governor Michele Bullock commented last week that CPI was a little higher than expected, but it was about where we thought it would come. Bullock further stated that the central bank aims to slow the economy without tipping it into recession.
Apart from this, any signs of economic improvement in China also support market sentiment and might lift the China-proxy AUD this week. Market players will keep an eye on the Chinese PMI data on Tuesday.
The monthly Australian Retail Sales for September is due later on Monday, which is expected to grow 0.3% from the previous reading of 0.2% rise. Later this week, the US CB Consumer Confidence will be released on Tuesday. The spotlight this week will be the Fed policy meeting and this event could trigger the volatility in the market. Traders will take cues from the events and find trading opportunities around the AUD/USD pair.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD keeps the offered bias near 1.1360
EUR/USD remains under pressure in the mid-1.1300s following the press conference by the ECB’s Lagarde on Thursday, all after the central bank matched estimates and unanimously lowered its policy rates at its event.
GBP/USD advances to daily highs past 1.3250
GBP/USD is picking up extra upside impulse and is revisiting the 1.3250 zone, or daily peaks, as the US Dollar is trimming part of its earlier advance. The move in Cable remains propped up by a firm tone in the risk complex.
Gold loses traction and revisits the $3,320 zone
Gold burst to another all‑time high, teasing the $3,360 mark per ounce before easing back to the $3,320 zone per troy ounce as the Greeback staged a comeback and Treasury yields firmed across the curve.
Crypto market cap fell more than 18% in Q1, wiping out $633.5 billion after Trump’s inauguration top
CoinGecko’s Q1 Crypto Industry Report highlights that the total crypto market capitalization fell by 18.6% in the first quarter, wiping out $633.5 billion after topping on January 18, just a couple of days ahead of US President Donald Trump’s inauguration.
Future-proofing portfolios: A playbook for tariff and recession risks
It does seem like we will be talking tariffs for a while. And if tariffs stay — in some shape or form — even after negotiations, we’ll likely be talking about recession too. Higher input costs, persistent inflation, and tighter monetary policy are already weighing on global growth.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.