Robust US jobs data nudges Australian Dollar lower to near 0.6850

Modest selling pressure leaves AUD/USD near 0.6860 in early Asian trade on Monday.
October US NFP beat market forecasts with an increase of 165,000.
Last week’s RBA hike took the OCR to an 18-year high.

Mild selling pressure keeps AUD/USD around 0.6860 in Monday’s early Asian trading, as better-than-forecast US jobs figures lend some support to the US Dollar (USD) against the Australian Dollar (AUD). Attention now turns to China’s Consumer Price Index (CPI) inflation report, scheduled for release later in the day.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

October Nonfarm Payrolls (NFP) increased by 165,000, exceeding the market forecast of 65,000, according to Friday’s release from the US Bureau of Labor Statistics (BLS). September’s gain was revised from 29,000 to 60,000. The Unemployment Rate, meanwhile, eased from 4.2% in September to 4.1% in October.

Bets on another quarter percentage point rate increase at the December policy meeting have strengthened. The CME FedWatch tool put the probability at 79.6%, although it indicated just one additional increase thereafter.

In Australia, the Official Cash Rate (OCR) reached its highest level since 2008 after the Reserve Bank of Australia (RBA) raised it by 25 basis points (bps). The decision took the rate from 4.60% to 4.85%.

Inflation remains elevated and is expected to stay that way for much of 2027, the Australian central bank said in its monetary policy statement. Acknowledging the task of helping to lower inflation, Treasurer Jim Chalmers said the government "has more work to do".

How are the risk sell-off and RBA credibility concerns weighing on the Aussie?

A “0.6862 - 0.6954 overnight range” for AUD/USD was highlighted by Societe Generale strategists, who described spot as “skid[ding] below 0.69 for first time since early July” and “on track for lowest weekly close since January.” Nearby levels were identified as “support 0.6865, resistance 0.7080,” with policy concerns adding to the pressure after Hauser “warns public confidence in ability of RBA to counter inflation is at risk.” Societe Generale also pointed to wider currency-market effects, noting that “FX spillovers from the selloff in stocks surfaced in the AUD, the SEK and NZD in G10,” whereas “the KRW and MXN rank among the worst performers in EM.”

Will strong jobs data and inflation concerns keep Daly backing further tightening?

A notably more hawkish message from the Fed’s Daly registered 8/10 on the FXS Speechtracker, against an established baseline of 6.4/10. Daly stressed that “real wages are falling”, despite the jobs report being “good news” and wage growth that “isn’t booming.” Her remarks favoured additional rate increases: inflation has been “high for too long” and must stay the “number 1 priority”, while policy “will have to tighten further”. A robust labour market gives the Fed “latitude”, although the approach would remain “deliberate” and dependent on incoming data. Taken together, the comments point towards a risk of further tightening, with little concern over a substantial slowdown in growth. There was, however, some recognition that AI-related repricing and cooling demand could moderately restrain activity.

An increase of 0.95 points took the FXS Fed Sentiment Index to 143.10, leaving it firmly hawkish and aligning with the above-baseline FXS Speechtracker score. The shift suggests markets should view Daly’s comments as incrementally hawkish for the Dollar, keeping the heightened likelihood of further policy tightening in focus.

Technical Analysis: Can AUD/USD shake off its bearish bias below the 100-day SMA?

A distinctly bearish picture persists on the AUD/USD daily chart, where the pair continues to fall below all major moving averages and the full Bollinger envelope. Resistance overhead is reinforced by the Bollinger Bands’ 20-period simple moving average (SMA) and the 100-day SMA. Near 33, the Relative Strength Index (14) points to continuing downside pressure, although it is nearing oversold territory.

A recovery would first encounter the lower Bollinger Band around 0.6875, followed by the Bollinger midline at 0.6985. Beyond those levels lie the 100-day SMA near 0.7025 and the upper Bollinger Band at 0.7090. This framework shows no significant support beneath the prevailing price. A sustained move back above 0.6875 would therefore offer the first indication that sellers’ immediate grip is weakening; without it, further declines remain possible.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

Australian Dollar: Frequently asked questions

Which major influences shape the Australian Dollar?

Interest rates set by the Reserve Bank of Australia (RBA) rank among the main influences on the Australian Dollar (AUD). For resource-rich Australia, the price of iron ore, its largest export, is another important driver. Other considerations include economic conditions in China, Australia’s biggest trading partner, alongside domestic inflation, economic growth and the trade balance. Investor sentiment matters too: a shift towards riskier assets, known as risk-on, supports the AUD, while a preference for safe havens is described as risk-off.

Through which channels do Reserve Bank of Australia decisions affect the Australian Dollar?

By setting the interest rate at which Australian banks lend to one another, the Reserve Bank of Australia (RBA) affects rates across the wider economy and, in turn, the Australian Dollar (AUD). Its primary objective is stable inflation of 2-3%, pursued through increases or reductions in interest rates. Rates that are relatively high compared with those of other major central banks support the AUD; relatively low rates have the reverse effect. Credit conditions can also be influenced through quantitative easing or tightening. Easing is negative for the AUD, whereas tightening is positive.

Why does China’s economic performance matter for the Australian Dollar?

As Australia’s largest trading partner, China has a substantial influence on the Australian Dollar (AUD). A strong Chinese economy buys more Australian raw materials, goods and services, increasing demand for the AUD and lifting its value. When Chinese growth falls short of expectations, the reverse applies. As a result, upside or downside surprises in China’s growth figures often feed directly into the Australian Dollar and its currency pairs.

Why do iron ore prices influence the Australian Dollar?

With annual exports worth $118 billion according to 2021 data, iron ore is Australia’s biggest export, and China is its main destination. Changes in its price can consequently influence the Australian Dollar. Rising iron ore prices generally boost overall demand for the currency and lift the AUD; falling prices usually have the opposite effect. Higher prices also increase the likelihood of an Australian trade surplus, providing another source of support for the AUD.

What role does the trade balance play in the Australian Dollar’s value?

Another influence on the Australian Dollar is the trade balance, which measures export earnings against import payments. Strong overseas demand for Australian exports can raise the currency’s value when the demand generated by foreign buyers exceeds Australia’s spending on imports. A positive net trade balance therefore strengthens the AUD, while a negative balance has the reverse effect.