AUD/USD edged up to about 0.6985 in early Asian trade as the US Dollar softened after the University of Michigan Consumer Sentiment Index slipped to 46.3 in October from 48.1, undershooting the 47.6 consensus. UoM inflation expectations rose, but derivatives pricing pointed to a cautious Federal Reserve path: CME FedWatch showed a 17.7% chance of a 25 bps hike this month versus 24.4% a week earlier, while December odds were 84.1%. Treasury volatility also eased, with a lower MOVE index cited as a stabilising factor for risk-sensitive currencies and EM carry trades. Fed communication remained restrictive; an FXS Speechtracker reading of 7.3/10 sat above the 7.2/10 historical average, while the FXS Fed Sentiment Index fell 0.25 points to 138.33, still above the neutral 100 level.
Australian Rate Expectations And Technical Outlook
In Australia, rate expectations cooled after CPI matched forecasts, pulling implied odds of a Reserve Bank of Australia hike in early November to around 20%, with money markets leaning towards a hold. Attention turns to the RBA meeting minutes on Tuesday. Technically, AUD/USD retained a bearish bias below the 100-day SMA, with the 14-day RSI at 40.9; resistance was flagged near 0.7020 and 0.7045, while support sat around 0.6889–0.6890, with an upper Bollinger reference near 0.7155.
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