The AUD/USD has faced pressure for four days due to mixed Australian employment data and economic concerns in China. This situation has impacted the Australian Dollar, although expectations about the Reserve Bank of Australia’s policies offer some support. The pair is trading around 0.6630, down 0.10%, amidst weak global equity markets. Additionally, the US Dollar is near its lowest point since October 7, as expectations for US Federal Reserve interest rate cuts rise.

October NFP Report Awaited

Traders are closely watching the US NFP report for October and are hesitant to make significant moves until its release. Expectations of a more dovish successor to Fed Chair Jerome Powell also support the AUD/USD. In Australia, interest rates from the RBA and prices of key exports, like Iron Ore, play important roles. The health of the Chinese economy is crucial since it directly affects demand for the Australian Dollar. A positive trade balance, driven by high export demand compared to imports, further strengthens the currency. Overall, a stable interest environment and shifting commodity prices are key factors for the AUD. As of today, December 16, 2025, the main themes from over two years ago still influence the AUD/USD, though the situation has changed. The gap between a hawkish Reserve Bank of Australia (RBA) and a dovish US Federal Reserve has widened, pushing the pair to above the 0.66 level seen previously. Currently, the pair is consolidating around the 0.6850 mark.

High Yield Support for AUD

The RBA has maintained a hawkish approach, keeping the cash rate at a restrictive 4.35% throughout 2024 and 2025 to combat ongoing inflation. Australia’s Q3 2025 inflation rate stood at 3.4%, still above the RBA’s target band, which suggests that rate cuts are not coming soon. This high yield is a key support for the Australian dollar. On the other hand, the Federal Reserve began cutting rates mid-2024 as US inflation eased more significantly. The latest US jobs report for November 2025 showed a modest payroll increase of 160,000, confirming a slower labor market and keeping Fed rate cuts on the table for early 2026. This ongoing US dollar weakness benefits the AUD/USD. Concerns about China’s economy remain persistent, limiting the Aussie’s potential. China’s official manufacturing PMI for November 2025 came in at 49.9, indicating a slight contraction, mainly due to issues in its property sector. However, iron ore prices have stayed unexpectedly stable around $120 per tonne, which has helped prevent a larger drop in the AUD. For derivative traders, selling AUD/USD put options with a strike price around 0.6700 could be a useful strategy for earning premium. The high yield of the AUD and the weakening USD provide solid support for the currency pair. This method profits from time decay, betting that significant downturns are unlikely soon. Alternatively, those who believe the pair will move higher could consider buying call spreads as a defined-risk approach to a potential breakout above 0.6900. A softer-than-expected US inflation report could hasten the timeline for Fed cuts, pushing the pair higher. The main risk to this strategy would be an unexpected dovish stance from the RBA, which seems unlikely before their next meeting in February 2026. Create your live VT Markets account and start trading now.

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