Focus on US Economic Data

Recent comments from Fed officials show some concern, with a few disagreeing on rate cuts. They want more clarity on inflation. Now that key policy announcements are done, the focus shifts to economic data. The upcoming US Nonfarm Payrolls (NFP) report and Consumer Price Index (CPI) are crucial for traders. NFP shows how many jobs have been created in the US. Payroll changes can be unpredictable and impact the forex market. A high NFP number can strengthen the US Dollar, while a low number might weaken it. Employment data is important for Federal Reserve policy, influencing currency movements. NFP releases can be highly variable and may lead to market volatility. Usually, if the numbers exceed expectations, the US Dollar benefits. The difference in central bank policies keeps the Australian dollar strong against the US dollar, which is under pressure. The AUD/USD has remained near 0.6720, benefiting from three consecutive weeks of gains. This stability comes as the Reserve Bank of Australia keeps its rate at 3.60%, while the Federal Reserve continues to ease its stance. Recent US economic reports confirm the Fed’s cautious approach. The November NFP report, released on December 5th, 2025, showed a job gain of only 120,000, falling short of expectations and indicating a slowing labor market. The November CPI also revealed core inflation has eased to 3.8% year-over-year, suggesting the Fed may have room to cut rates next year.

Trading Strategies for AUD/USD

For derivatives traders, this environment supports strategies that benefit from a rising AUD/USD. Buying call options allows traders to take advantage of further gains while managing risk, which is wise given the current trend. This approach is especially useful if upcoming data weakens the US dollar further. Next week, all eyes will be on the preliminary S&P Global PMI data from both Australia and the US. These reports will be the first major indicators of economic momentum for December. A strong Australian reading along with a weak US number could push AUD/USD higher. We should keep in mind the volatility economic data can create, as shown during the 2023-2024 tightening cycle when unexpected inflation figures led to sharp market reversals. Currently, the trend favors the Aussie, but any surprising strength in US data could cause a pullback. Using options can help manage the risk of sudden market moves. The market is pricing in a long pause from the RBA, with some anticipating a potential rate hike in 2026 if inflation remains high. This fundamental support for the Aussie is crucial for the pair’s strength. As long as this policy difference persists, the AUD/USD is likely to move upward. Create your live VT Markets account and start trading now.

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