Inflation Data and Economic Indicators

Inflation data has weakened the Australian Dollar. In November, the Consumer Price Index rose by 3.4% compared to last year, which was below expectations and a slowdown from October. While inflation remains above the Reserve Bank of Australia’s target, the drop adds uncertainty to future monetary policy. In contrast, the US Dollar has strengthened due to solid economic indicators. Employment and services data suggest a strong economy, making it less likely that the Federal Reserve will adopt easier monetary policies. The US Nonfarm Payrolls report, coming out on Friday, will be a key factor in shaping interest rate expectations. Comparing the economic situations of Australia and the US, the AUD/USD pair is under continued pressure, reacting to changes in the Reserve Bank of Australia and the Federal Reserve. As of today, January 9, 2026, the Australian Dollar is struggling against the US Dollar, trading near 0.6750. We see central banks’ differing outlooks, adding to uncertainty for the Aussie compared to the greenback.

Trade Data and Central Bank Policy

In early 2025, the AUD/USD pair fell from a one-year high. This decline was due to a shrinking Australian trade surplus and a slowdown in inflation, which dropped to 3.4%. These issues led to uncertainty regarding the Reserve Bank of Australia’s (RBA) policies, putting pressure on the currency. Today’s situation is similar, as the latest trade data from November 2025 shows a contraction due to weaker commodity exports. With quarterly inflation at 3.2% and the RBA cash rate at 4.10%, the central bank is cautious about easing policies too quickly. Currently, the market sees only a 25% chance of a rate cut by May. Conversely, the US economy shows strong performance. The December jobs report revealed that 180,000 payrolls were added, keeping the unemployment rate at 3.9%. This strength allows the Federal Reserve to be patient, reducing expectations for aggressive rate cuts from their current 4.75-5.00% range. For derivative traders, this economic backdrop suggests selling AUD/USD call options with strike prices above 0.6900 might be a smart strategy in the coming weeks. This method allows traders to earn premiums while betting that significant gains for the pair are unlikely. The limited upward movement increases the chances these higher-strike options will expire worthless. Alternatively, traders could use put spreads to position for potential declines. Purchasing an at-the-money put option and selling a lower-strike put can lower the total cost of the trade. This strategy offers a defined-risk opportunity to profit if upcoming US inflation data is strong, potentially pushing AUD/USD down to the 0.6600 support level. Create your live VT Markets account and start trading now.

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