Insights 
VT 
The AUD weakens as the USD gains strength, with expectations for a Fed rate cut dwindling. Markets only assign a 6% probability to an RBA rate cut in December. The USD strengthens ahead of delayed US economic data releases, pushing AUD/USD to trade around 0.6510, down 0.40% on the day.
Several Fed officials have reiterated that the current policy is “restrictive,” decreasing the chance of a rate cut at the December meeting. In Australia, the Unemployment Rate fell to 4.3% in October, while Employment Change rose by 42.2K, fostering the view that the RBA will maintain a cautious stance. ASX futures imply only a 6% chance of a December rate cut from 3.60% to 3.35%.
Economic Data And Market Reactions
The RBA will release minutes from its November meeting, where it kept rates unchanged at 3.6%, citing persistent inflation. In the US, traders prepare for data delayed due to the government shutdown, with some October figures potentially unreleased. Recent Fed comments suggest maintaining the current policy stance, with markets lowering easing expectations. The stronger-than-expected New York Empire State Manufacturing Index at 18.7 for November highlights US economic resilience.
The landscape has shifted for the US Dollar as expectations for a December Federal Reserve rate cut have faded significantly. We’ve seen the probability drop from 67% to just 46% in a week, pushing the Greenback higher against other currencies. This suggests that options strategies favoring a stronger dollar, such as buying puts on the AUD/USD, are becoming more attractive.
In Australia, the Reserve Bank appears firmly on hold, with the market pricing in only a 6% chance of a rate cut. While last week’s strong jobs report provided temporary support, that momentum is gone. The stabilization of iron ore prices around $125 per tonne in the latter half of 2025 has also removed a key catalyst for significant Aussie strength.
For traders, this positions the AUD/USD pair for a potential move lower, especially as it tests the critical 0.6500 level. We should be prepared for increased volatility, particularly with the RBA meeting minutes due this week. Any hawkish surprise from the RBA could challenge this downward trend, but the path of least resistance currently appears to be lower.
Uncertainty And Market Implications
Significant uncertainty surrounds the US economic picture due to the data delays from the recent government shutdown. The delayed September jobs report, due November 20th, will be a major market-moving event. We recall similar periods of data disruption in the past, such as during the 2018-2019 shutdown, which often lead to sharp, unpredictable market swings once the information is finally released.
The Fed’s cautious stance is understandable when we consider that Core CPI has remained stubbornly above 3% for most of 2025. This persistent inflation is why officials are hesitant to signal rate cuts, a lesson they learned during the inflationary spike of 2022. This backdrop supports derivative plays that bet on interest rates remaining elevated, such as selling out-of-the-money call options on rate futures.
