The AUD/USD fell to about 0.6630 after reaching a high of 0.6686. This drop followed disappointing job data from Australia, which showed a loss of 21,300 jobs in November instead of the expected gain of 20,000. The unemployment rate stayed at 4.3%, just below what analysts predicted. This unexpected job loss has caused many to rethink the Reserve Bank of Australia’s (RBA) plans for interest rates. Meanwhile, the US Dollar is facing challenges after the Federal Reserve cut interest rates for the third time in a row. The Fed lowered rates by 25 basis points, bringing them to 3.50%–3.75%, and hinted at the possibility of further cuts by 2026. The US Dollar Index, which tracks the US Dollar’s strength against six major currencies, remains close to a seven-week low at 98.55.

RBA Governor’s Statement

On Tuesday, the RBA Governor mentioned that no rate cuts are in the works, as inflation risks are increasing. Recent economic changes show how the Australian and US economies are influencing each other. These shifts, driven by economic data and policies, affect currency movements and trading predictions. The unexpected decline in Australian jobs serves as a key indicator for the weeks ahead. Today’s report of losing 21,300 jobs instead of gaining 20,000 challenges the RBA’s tough stance on inflation. This sudden weakness may force the RBA to change its approach, putting downward pressure on the Aussie Dollar. This jobs report contradicts what RBA Governor Bullock said just days before about not considering rate cuts. With the unemployment rate at 4.3%, traders are now uncertain whether this strong position can last. The market will closely watch for any changes ahead of the RBA’s next meeting in February 2026.

Looking Ahead

Looking back, we remember similar situations in late 2023 when unexpected economic data led to sharp adjustments in rate expectations. Now, all eyes will be on the quarterly inflation data coming in late January 2026. This report will be crucial for determining whether the weak jobs report was an anomaly or the start of a trend that forces the RBA to act. On the flip side, the US dollar is weak for its own reasons. The Federal Reserve’s recent rate cut, coupled with the US Dollar Index hovering near a seven-week low, supports the AUD/USD pair and prevents a steep decline. The Fed’s decision was backed by recent data showing that US inflation is easing, with the Consumer Price Index (CPI) for November 2025 at just 2.9%. With the Fed signaling only one more potential rate cut in 2026, the dollar may trend sideways or downward. This trend is likely to continue unless surprising January 2026 job and inflation data shows a sudden increase in economic activity. The divide between the uncertain RBA and the clearly dovish Fed suggests increased volatility for the AUD/USD pair. Traders should consider strategies that capitalize on sharp price movements instead of clear trends. Options straddles or strangles ahead of the key inflation reports from both Australia and the US in January could be a smart approach given the expected uncertainty. Create your live VT Markets account and start trading now.

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