Insights 
VT 
The Australian Dollar narrowed its losses on account of the Reserve Bank of Australia’s (RBA) cautious policy stance and robust domestic employment data. RBA Meeting Minutes indicated that if data remains strong, the cash rate might stay unchanged. The stronger employment figures include a decline in unemployment to 4.3% in October from a previous 4.5%.
The US Dollar slid slightly, trading around 99.50, amidst market anticipation of US data and a likely Federal Reserve rate cut. The CME FedWatch Tool showed a drop in the likelihood of a 25 basis point rate cut at the December meeting, moving from 62% to 43% over a week. Officials noted the labour market’s vulnerability, stressing a cautious approach to rate reductions.
The Aud Usd Pair
The AUD/USD pair remained near 0.6490, within a rectangular range, indicating sideways movement. It traded below the nine-day EMA, with major support at 0.6470 and resistance at 0.6514. The Australian Dollar’s movement is influenced by several factors including RBA interest rates, Chinese economic health, and iron ore prices.
The table reflected the Australian Dollar’s weakness against the Swiss Franc. Various factors drive the AUD, including interest rates, export prices, and trade balance, often tied to the Chinese economy.
Based on the current market dynamics, we see a growing difference between the policy paths of the Reserve Bank of Australia and the US Federal Reserve. The RBA is holding firm on its interest rate, supported by a surprisingly strong domestic economy. This contrasts sharply with the Federal Reserve, which is signaling a greater willingness to cut rates due to a cooling US labor market.
Global Environment For Risk Sensitive Currencies
To support this view, we’ve seen recent data showing Australia’s third-quarter inflation came in hotter than expected at 3.1%, staying above the RBA’s target band. Furthermore, iron ore prices, a key driver for the Aussie dollar, have remained resilient, recently trading around $125 per tonne on the back of steady demand from China. These factors reinforce the case for the RBA to delay any rate cuts well into 2026.
On the other hand, the US economy is showing clearer signs of slowing down. The most recent Non-Farm Payrolls report for October, released in early November 2025, showed only 85,000 jobs were added, well below forecasts and confirming the weakness seen in other labor reports. This followed a US Core CPI reading that fell to 2.8%, giving the Fed more room to ease policy without re-igniting inflation.
For derivative traders, this situation suggests positioning for potential AUD/USD strength in the coming weeks. The pair is currently consolidating in a range between approximately 0.6470 and 0.6630, which may present an opportunity to buy call options with a January 2026 expiry. This strategy would benefit from a potential upside breakout while capping the initial risk.
We must also manage the risk that this breakout does not happen. The 0.6470 level serves as a crucial support, and a sustained break below it would challenge our bullish view. Traders could use this level to set stop-losses on long positions or consider buying put options as a hedge against unexpected Aussie dollar weakness.
The broader global environment also appears to be turning more favorable for risk-sensitive currencies like the AUD. The expected finalization of a rare earths agreement between the US and China by Thanksgiving could boost global trade sentiment. This improved risk appetite, if it materializes, would provide another tailwind for the Australian dollar.
