|

Aussie extends weekly gains as Fed pause bets offset hawkish rhetoric

  • AUD/USD rises 0.38% on Friday, securing a 0.58% weekly gain.
  • US consumer sentiment falls to 46.3, while inflation expectations climb.
  • Markets see an 81% chance of an October Fed hold and December hike.

The Aussie Dollar ended Friday’s session on a positive note, gaining 0.38% and 0.58% weekly as the US Dollar trimmed some of its weekly gains, while US data confirmed investors' expectations that the Federal Reserve would hold rates steady in the October meeting. The AUD/USD trades at 0.6983.

AUD/USD closes at 0.6983 as softer US sentiment supports the Aussie despite renewed December hike bets

Market mood was upbeat on Friday, with Wall Street posting losses, as a solid earnings session drove US equities close to record highs. The US Dollar Index (DXY), which tracks the buck’s performance against six currencies, drifted higher by 0.12% to 102.73.

Data from the US revealed that consumers are becoming pessimistic about the economy, as the Consumer Sentiment Index for October slipped to 46.3, down from 48.1 and missing estimates of 47.6. The same survey showed that inflation expectations for 1- and 5-year horizons rose, with the former from 4.6% to 4.7% and the latter from 3.4% to 3.5%.

The FOMC minutes showed full support for a rate hike but revealed division: some saw it as precautionary, others as the start of a tightening cycle.

Fed speakers continue this week. Fed Governor Waller favors more rate hikes, not necessarily consecutive. St. Louis Fed's Musalem says inflation is high and the strong labor market requires the Fed to address it.

Money markets suggest no Federal Reserve rate hike in October, with 81% chance that rates will stay pat. For December, there's an 81% chance of a 25-basis-point increase to the Fed funds rate, based on Prime Terminal data.

Over the next week, Australia’s economic docket will feature the release of the Reserve Bank of Australia (RBA)'s minutes from its last meeting. Two days after that, employment data would dictate the Aussie Dollar’s direction.

In the US, traders will focus on inflation data for consumers and producers, then look at Retail Sales, Fed speeches, and employment reports.

AUD/USD Price Forecast: Technical Outlook

Chart Analysis AUD/USD
AUD/USD daily chart

In the daily chart, AUD/USD trades at 0.6984, keeping a bearish near-term tone as spot holds beneath the triple simple moving average cluster around 0.7089. The pair also remains below a well-defined horizontal barrier at 0.7198, suggesting rallies are likely to face selling pressure while price stays capped under these overhead levels. The Relative Strength Index (14) near 40 hints at weak but not extreme bearish momentum, aligning with a corrective phase rather than an oversold capitulation.

On the topside, immediate resistance is seen at the 50/100/200-day simple moving averages grouped near 0.7089, followed by the horizontal line at 0.7198, where previous supply is likely to re-emerge. On the downside, the broader structure is underpinned by several rising trend-line supports originating from the 0.68–0.69 area, which suggest that while the short-term bias is negative, the medium-term uptrend is still intact unless price decisively breaks below those ascending baselines.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

Australian Dollar Price This week

The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies this week. Australian Dollar was the strongest against the Euro.

USDEURGBPJPYCADAUDNZDCHF
USD0.54%0.04%0.28%-0.01%-0.48%0.06%0.19%
EUR-0.54%-0.48%-0.14%-0.52%-0.98%-0.52%-0.32%
GBP-0.04%0.48%0.31%-0.01%-0.50%-0.02%0.16%
JPY-0.28%0.14%-0.31%-0.26%-0.66%-0.21%-0.05%
CAD0.00%0.52%0.01%0.26%-0.42%-0.02%0.20%
AUD0.48%0.98%0.50%0.66%0.42%0.49%0.69%
NZD-0.06%0.52%0.02%0.21%0.02%-0.49%0.18%
CHF-0.19%0.32%-0.16%0.05%-0.20%-0.69%-0.18%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).

Author

Christian Borjon Valencia

Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.

More from Christian Borjon Valencia
Share:

Editor's Picks

AUD/USD holds firm near 0.7000 after Chinese inflation, trade data

AUD/USD stays firm near 0.7000 in Wednesday’s Asian session, picking up some bids after China's mixed inflation and upbeat trade data. CPI rose less than expected in September, while PPI inflation picked up. Meanwhile, the Chinese trade surplus unexpectedly widened in September. The pair remains underpinned by a broadly subdued US Dollar, despite the Middle East escalation, as focus remains on US CPI data.

USD/JPY consolidates near 158.50; looks to US CPI for fresh impetus

USD/JPY stays range-bound near 158.50 in the Asian session on Wednesday, with looming intervention risks supporting the Japanese Yen and capping upside amid a softer US Dollar. However, geopolitical uncertainties act as a tailwind for the safe-haven USD and the pair. Traders also seem hesitant ahead of the release of the latest US inflation figures.

Gold consolidates above $4,150 as softer USD lends support ahead of US CPI report

Gold steadies above $4,150 during the Asian session on Wednesday, awaiting the release of the latest US inflation figures before the next leg of a directional move. The US Consumer Price Index is due for release later today, followed by the Producer Price Index (PPI) on Thursday. Moreover, US Federal Reserve Chair Kevin Warsh's speech at the annual meetings of the IMF and World Bank in Bangkok on Friday will be scrutinized for more cues about the future policy path.

Bitcoin eyes $85,000; ETH holds support, XRP stabilizes
Bitcoin (BTC), Ethereum (ETH), and Ripple (XRP) show signs of recovery on Wednesday as buyers try to regain control after their recent market weakness. BTC extends its rebound toward the $85,000 resistance, while ETH and XRP find support around key levels.
US CPI in focus ahead of October FOMC Meeting
In the US, the most important data release of the week will be the September CPI, released this afternoon. We forecast headline inflation at 0.5% m/m SA, 3.6% y/y (prior: 0.6% m/m, 3.4% y/y) and core inflation at 0.2% m/m SA, 2.5% y/y (prior: 0.3% m/m, 2.4% y/y), with energy prices being the main driver of the expected pickup in headline inflation.
Has Bitcoin really escaped the macro forces it was built to fight?
Over 17 years ago, Satoshi Nakamoto designed Bitcoin (BTC) on the back of a global financial crisis as an alternative to the global monetary system outside the control of central banks, governments and traditional intermediaries. This raises a key question: has Bitcoin really become independent of the macroeconomic forces it was built to challenge?