The AUD is losing strength as the USD gains, with fewer expectations for a Fed rate cut. Markets believe there is only a 6% chance of an RBA rate cut in December. As delayed US economic data is set to be released, AUD/USD trades at about 0.6510, which is down 0.40% today. Several Fed officials have stated that the current policy is “restrictive,” making a December rate cut less likely. In Australia, the Unemployment Rate dropped to 4.3% in October, while Employment Change increased by 42.2K. This leads to the belief that the RBA will remain cautious. ASX futures also indicate only a 6% chance of a rate cut from 3.60% to 3.35%.

Economic Data And Market Reactions

The RBA will release minutes from its November meeting, where it decided not to change rates, keeping them at 3.6% due to ongoing inflation concerns. In the US, traders are getting ready for economic data that was delayed because of the government shutdown, including some October figures that may not be released. Recent comments from the Fed suggest that they will keep current policies, which has led to lower expectations for rate cuts. The New York Empire State Manufacturing Index showed a stronger-than-expected 18.7 for November, indicating US economic strength. Expectations of a Federal Reserve rate cut in December have drastically decreased. The probability has dropped from 67% to just 46% in one week, which has pushed the US Dollar higher against other currencies. This makes strategies that favor a stronger dollar, like buying puts on the AUD/USD, more appealing. In Australia, the Reserve Bank seems to be holding steady, with only a 6% chance of a rate cut being priced in. While last week’s strong jobs report briefly supported the AUD, that momentum has faded. The stabilization of iron ore prices around $125 per tonne in late 2025 has also taken away a major reason for the AUD to strengthen. Traders should prepare for potential downward movement in the AUD/USD pair as it approaches the key level of 0.6500. Increased volatility is expected, especially with the RBA meeting minutes being released this week. A surprising hawkish stance from the RBA could disrupt this downward trend, but currently, it seems like the most likely direction is downward.

Uncertainty And Market Implications

There is significant uncertainty about the US economy due to delays in data from the recent government shutdown. The delayed September jobs report, set for release on November 20th, could heavily impact the markets. Past data disruption periods, like the 2018-2019 shutdown, often led to sharp and unpredictable market movements when the information was finally published. The Fed’s cautious approach makes sense considering that Core CPI has remained stubbornly above 3% for most of 2025. This ongoing inflation is causing officials to hesitate in signaling rate cuts, a lesson they learned during the inflation spike in 2022. This context supports trades betting on continued high interest rates, like selling out-of-the-money call options on rate futures. Create your live VT Markets account and start trading now.

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