Impact of Economic Data on AUD/USD

The Australian Dollar (AUD) will be influenced by the Trade Balance data for September. Meanwhile, the US Dollar (USD) remains strong, with lower expectations for rate cuts from the Federal Reserve this year. The US Dollar Index has reached a three-month peak near 100.00, with the chance of a rate cut in December dropping from 94.4% to 67.3%. The Reserve Bank of Australia’s (RBA) decisions on interest rates, based on the economic outlook, can either support or weaken the Australian Dollar. With the RBA keeping its interest rate at 3.6%, the AUD/USD pair is under significant pressure, falling to the 0.6500 level. This drop shows that the market believes the RBA is still worried about inflation, even as it pauses raising rates. Traders should recognize this clear bearish signal for the Australian Dollar in the short term. The RBA’s position is reinforced by ongoing inflation concerns, highlighted in the recent Q3 CPI data. Governor Bullock mentioned a need for “a little bit of tightness,” indicating that any shift toward rate cuts is unlikely. The latest inflation figure for October 2025 came in at 0.6%, slightly above what was expected, showing persistent price pressures. Additionally, Australia’s labor market is strong, with the unemployment rate steady at 4.0%, contrary to expectations of a small increase. This economic strength gives the RBA more reason to maintain a strict monetary policy to control inflation. For traders, this solidifies the case for a weaker Australian Dollar.

US Dollar Dynamics

Conversely, the US Dollar is gaining strength as expectations for a December rate cut by the Federal Reserve decline. Recent US Core PCE inflation data, which the Fed pays close attention to, was slightly higher than expected at 0.3% for October 2025. This decrease in the likelihood of a year-end Fed rate cut supports the US Dollar. Looking at the bigger picture, this situation shows a clear difference in policies, unlike the global rate hikes in 2023 and 2024. While the Fed weighs its next steps, the RBA seems set to hold a hawkish stance. This divergence is the main factor putting pressure on the AUD/USD exchange rate. Create your live VT Markets account and start trading now.

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