AUD/USD slipped 0.25% and traded near 0.7060 on Wednesday. Traders stayed cautious ahead of the FOMC minutes due later in the day, and Australia’s jobs report due on Thursday. The US Dollar firmed as markets looked ahead to the Federal Reserve’s January meeting account.
Markets will scan the minutes for signals on the US rate outlook, including when cuts might start and how large they could be. If the Fed sounds more cautious on easing, the US Dollar could strengthen and weigh on the Australian Dollar.
Key Event Risks Ahead
Attention is also on Australia’s January employment report. Forecasts point to around 20,000 new jobs after a strong December. The unemployment rate is expected to edge up to 4.2% from 4.1%.
The Westpac–Melbourne Institute Leading Index slowed sharply in January. That suggests weaker economic momentum, even with support from higher commodity prices. Slower growth and tight financial conditions could further pressure activity, while Reserve Bank of Australia expectations remain closely tied to incoming data.
We expect the Aussie dollar to struggle near 0.6580 today, slipping slightly as traders stay on the sidelines. The main focus is the Fed minutes later today, followed closely by Australia’s employment data tomorrow. Together, they set up a clear tug-of-war between US and Australian economic signals.
The US Dollar is finding support as markets scale back the aggressive rate-cut bets seen late last year. The US January CPI print of 2.9% is another sign inflation remains sticky. If the Fed minutes lean cautious, the greenback could push higher and put more pressure on the Aussie.
In Australia, the market is preparing for the January jobs report. Consensus expects about 15,000 new jobs and an unemployment rate rising to 4.3%. This follows weak 0.3% GDP growth in Q4 2025. If the labour market softens, it would likely remove any remaining chance of further RBA rate hikes.
Options Strategies To Watch
With these risks in play, we see buying AUD/USD put options as a practical approach for the next few weeks. This can help protect against a drop if the Fed sounds hawkish and Australia’s jobs numbers disappoint. It also offers defined risk while positioning for a move back toward the 0.6400 area seen last year.
For traders who are unsure on direction but expect a large move, volatility may offer opportunities. Implied volatility in AUD/USD options has risen ahead of these events. A long straddle could benefit if either the Fed minutes or the jobs report triggers a breakout in either direction.
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