• AUD/USD trades around 0.6440 on Friday, down 0.10%, despite improving Australian PMI figures.
• Expectations of a December Federal Reserve rate cut weaken the US Dollar but fail to lift the Aussie.
• The Reserve Bank of Australia maintains a cautious stance as economic data continues to outperform.

AUD/USD softens slightly on Friday, trading around 0.6440 and down 0.10% at the time of writing. The decline comes despite supportive domestic data, as the pair struggles to extend Thursday’s rebound amid mixed global sentiment.

Australia’s economic momentum remains encouraging. The preliminary S&P Global Manufacturing Purchasing Managers Index (PMI) rose to 51.6 in November, improving from 49.7 previously and returning to expansion territory. The Services PMI increased to 52.7, while the Composite PMI strengthened to 52.6, reflecting broad-based resilience across key sectors.

This performance reinforces the cautious but steady approach of the Reserve Bank of Australia (RBA). Minutes from the November meeting signaled that policymakers may keep interest rates unchanged for an extended period if economic indicators continue to outperform. RBA Assistant Governor Sarah Hunter reiterated on Thursday that “sustained above-trend growth could fuel inflationary pressures,” noting that monthly inflation data can be volatile and should not prompt a premature policy reaction.

On the US side, the US Dollar (USD) remains broadly weaker as markets increase their bets on a Federal Reserve (Fed) rate cut at the December meeting. Recent US labor data strengthened this view. Nonfarm Payrolls (NFP) rose by 119,000 in September, beating the consensus of 50,000, but the Unemployment Rate increased to 4.4%, and wage growth remained contained. The moderation in labor conditions has encouraged some investors to anticipate policy easing.

The Federal Open Market Committee (FOMC) Minutes for the October meeting revealed a divided committee, with several members expressing doubts about the necessity of a December rate reduction. Nonetheless, the CME FedWatch tool shows that investors now assign a 36% chance to a 25-basis-point cut, up from the 30% priced the previous day.

Political noise in Washington also adds uncertainty to the USD outlook. US President Donald Trump stated earlier this week that he would “love” to remove Federal Reserve Chair Jerome Powell and already has a preferred successor in mind, reinforcing volatility around US monetary policy expectations.

Despite these supportive factors, AUD/USD remains unable to gain traction on Friday and trades slightly lower on the day, reflecting consolidation ahead of key US PMI and Michigan Consumer Sentiment Index releases expected later in the day.