Australian Dollar Strengthens Following China’s Rate Decision

On Thursday, the Australian dollar (AUD) saw an uptick against the US dollar (USD) after the People’s Bank of China (PBoC) opted to maintain its Loan Prime Rate (LPR) in November. Specifically, the one-year LPR stayed at 3.00% and the five-year LPR at 3.50%. Given that Australia and China maintain a close trading relationship, changes in Chinese interest rates could influence the value of the Australian dollar.

RBA Assistant Governor Sarah Hunter commented on the potential for continued economic growth to lead to increased inflationary pressures. She pointed out that monthly inflation figures can vary, and the central bank tends to avoid responding to data from just one month. Moreover, the RBA is closely monitoring labor market variables to assess supply capacity and also considering how the effectiveness of its monetary policies might evolve over time.

The AUD/USD pair bounced back after a drop of over 0.5% in the previous session. Support for the Australian dollar can be attributed to improved market sentiment, driven in part by impressive profits reported by semiconductor giant Nvidia.

Expectations of a cautious approach from the Reserve Bank of Australia (RBA) are also boosting the AUD. Minutes from the RBA’s recent meeting indicated that they might keep interest rates steady for a while, contingent on further positive economic data. Notably, strong wage growth in the third quarter, a robust jobs report from the previous week, and ongoing high inflation contribute to the perspective that an easing cycle is likely finished.

As of November 18, the December 2025 contract was listed at 96.41, suggesting an 8% probability of a rate cut from 3.60% to 3.35% at the forthcoming RBA meeting.

US Dollar Rises Amidst Diminished Expectations for Fed Rate Cuts

• The US Dollar Index (DXY), which gauges the dollar’s strength against a group of six major currencies, was trading around 100.20. Traders are keenly awaiting the release of the US September nonfarm payrolls (NFP) data later on Thursday to shape future Federal Reserve policy expectations.
• In premarket trading, the US dollar rose over 0.5% as the latest minutes from the Federal Open Market Committee (FOMC) meetings suggested diminished expectations for a rate cut in December.
• Minutes from the FOMC’s October meetings revealed a cautious stance among officials, with a split on the future trajectory of interest rates. While most members indicated that more rate cuts might be appropriate in the long run, some questioned the necessity of a December rate cut.
• Financial markets are currently pricing in a 33% likelihood of a 25 basis point rate cut during the Fed’s December meeting, a significant reduction from the 63% expectation a week earlier, according to the CME FedWatch tool.
• Richmond Fed President Thomas Barkin remarked that the labor market appears more balanced, noting improvements in employee retention and recent layoffs, which suggest caution is warranted. Although inflation does not seem to be climbing, he indicated uncertainty regarding the return to the Fed’s 2% target.
• In an Oval Office interview, US President Donald Trump expressed a desire to immediately dismiss Federal Reserve Chairman Jerome Powell, mentioning he has candidates in mind, albeit with a possibility of opting for a more conventional choice.
• On Monday, Federal Reserve Vice Chairman Philip Jefferson stated that risks to the labor market outweigh those associated with inflation, advocating for a slow progression of interest rate cuts.
• Data from the U.S. Department of Labor indicated a rise in new unemployment claims to 232,000, while continuing claims increased to 1.957 million for the week ending October 18. Weekly data from the previous three weeks was unavailable. Meanwhile, an Automatic Data Processing (ADP) report revealed an average of 2,500 jobs cut weekly in the four weeks leading up to November 1.
• National Economic Council Director Kevin Hassett cautioned that some October data might “never materialize” due to issues with data collection during the shutdown. Preliminary reports hint at a cooling job market and fluctuating consumer confidence amidst persistent inflation worries.
• Australia’s wage price index, adjusted for seasonal variations, rose by 0.8% in the third quarter, consistent with previous expectations. The annualized wage growth rate remained at 3.4%, matching market expectations.
• The RBA’s minutes from November indicated a balanced policy perspective, suggesting that the cash rate might remain on hold longer if future economic data exceeds current expectations.

AUD/USD Trades Near 0.6500 After Recent Rebound

As of Thursday, the AUD/USD pair was trading close to 0.6480. Daily chart analysis shows that the pair is moving sideways within a rectangular formation, indicating a trend of price consolidation. Currently, the price remains below the 9-day exponential moving average (EMA), suggesting that short-term momentum is relatively weak.

On the downside, the immediate support for the AUD/USD pair lies around 0.6470, followed by a five-month low of 0.6414 reached on August 21.

The first level of resistance appears at the psychological barrier of 0.6500, followed closely by the 9-day EMA at 0.6503. If the pair breaks above this resistance zone, there could be improved momentum, pushing it toward the upper boundary of the rectangle around 0.6630.