Near 0.6850: Australian Dollar slips on strong US jobs data

0.6860 is the level around which AUD/USD edges lower in early Asian trading on Monday.
165,000 US nonfarm jobs were added in October, beating market forecasts.
An 18-year high in the OCR followed last week’s RBA rate increase.

0.6860 is the level around which AUD/USD records a slight decline. In Monday’s early Asian session, the US Dollar (USD) draws some support against the Australian Dollar (AUD) from stronger-than-forecast US jobs figures. Attention now turns to China’s Consumer Price Index (CPI) inflation report, scheduled for later in the day.

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

October Nonfarm Payrolls (NFP) increased by 165,000, according to figures published on Friday by the US Bureau of Labor Statistics (BLS). The gain exceeded the 65,000 market forecast and followed September’s increase of 60,000, revised from 29,000. Unemployment also fell: the rate eased from 4.2% in September to 4.1% in October.

A further quarter percentage point rate increase at the December policy meeting is attracting stronger bets from traders. The CME FedWatch tool put the probability at 79.6%, although it indicated just one additional increase thereafter.

In Australia, the Reserve Bank of Australia (RBA) raised the Official Cash Rate (OCR) from 4.60% to 4.85%, an increase of 25 basis points (bps). The decision took the cash rate to its highest point since 2008.

Elevated inflation is expected to persist through much of 2027, the Australian central bank said in its monetary policy statement. Treasurer Jim Chalmers acknowledged that, to help reduce inflation, the government "has more work to do".

Aussie falls on risk sell-off and concerns over RBA credibility

An overnight trading range and a deteriorating weekly outlook frame Societe Generale strategists’ assessment of AUD/USD. They describe a “0.6862 - 0.6954 overnight range,” with spot having “skid[ding] below 0.69 for first time since early July” and now “on track for lowest weekly close since January.” Nearby levels are identified as “support 0.6865, resistance 0.7080,” while policy concerns have added to the move after Hauser “warns public confidence in ability of RBA to counter inflation is at risk.” Societe Generale also points to broader contagion: “FX spillovers from the selloff in stocks surfaced in the AUD, the SEK and NZD in G10,” while “the KRW and MXN rank among the worst performers in EM.”

8/10 hawkish reading: Daly signals further tightening after strong jobs data

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

A 0.95-point increase took the FXS Fed Sentiment Index to 143.10, well within hawkish territory and in line with the above-baseline FXS Speechtracker score. The shift suggests markets should view Daly’s comments as incrementally hawkish for the Dollar, keeping the increased likelihood of further policy tightening in focus.

Technical Analysis: 100-day SMA caps AUD/USD as bearish bias persists

Trading below every key moving average and the full Bollinger envelope, AUD/USD maintains a clear bearish bias as its decline continues on the daily chart. An overhead cap is reinforced by the Bollinger Bands’ 20-period simple moving average (SMA) and the 100-day SMA. Meanwhile, the Relative Strength Index (14), close to 33, points to persistent downside pressure, albeit with oversold territory approaching.

The lower Bollinger Band, around 0.6875, provides the first resistance on a recovery. Beyond it, the next barrier is the Bollinger midline at 0.6985, followed by the 100-day SMA near 0.7025 and the upper Bollinger Band at 0.7090. This framework shows no meaningful support beneath the current price. A sustained move back above 0.6875 would therefore offer the first indication that sellers are relinquishing immediate control; without that recovery, further declines remain possible.

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

Australian Dollar: frequently asked questions

Australian Dollar: the main drivers

Interest rates set by the Reserve Bank of Australia (RBA) rank among the main influences on the Australian Dollar (AUD). Australia’s resource wealth also makes the price of iron ore, its largest export, a key driver. Other influences include economic conditions in China, Australia’s biggest trading partner, alongside domestic inflation, growth and the trade balance. Investor appetite for risk matters too. Buying riskier assets, known as risk-on positioning, supports the AUD, while seeking safe havens represents a risk-off environment.

RBA policy decisions and their effect on the Australian Dollar

By setting the interest rate at which Australian banks can 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 cuts 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 weighs on the AUD, whereas tightening supports it.

China’s economic performance and the Australian Dollar

As Australia’s largest trading partner, China has a substantial influence on the Australian Dollar (AUD). A healthy Chinese economy buys more Australian raw materials, goods and services, increasing demand for the currency and lifting its value. Growth that falls short of expectations produces the opposite effect. Surprises in Chinese growth figures, whether positive or negative, consequently tend to affect the Australian Dollar and its currency pairs directly.

Iron ore prices as a driver of the Australian Dollar

At $118 billion annually, based on 2021 data, iron ore is Australia’s biggest export, with China its main destination. Its price can therefore influence the Australian Dollar. Rising iron ore prices generally lift overall demand for the AUD and increase its value; falling prices usually have the reverse effect. Higher prices also tend to make an Australian trade surplus more likely, providing another source of support for the AUD.

The trade balance and its influence on the Australian Dollar

Export earnings minus import spending make up a country’s trade balance, another influence on the Australian Dollar. Strong foreign demand for Australian exports can lift the currency because overseas buyers generate demand in excess of Australia’s spending on imports. A positive net trade balance therefore supports the AUD, while a negative balance has the reverse effect.