The Australian Dollar (AUD) remains subdued against the US Dollar (USD) on Friday, as traders position themselves ahead of key inflation data from both the United States and Australia. Mixed preliminary S&P Global PMI figures from Australia added to the cautious tone, while the US Dollar Index (DXY) continues to advance on safe-haven demand.
Mixed Australian PMI Data and Policy Outlook
Australia’s Manufacturing PMI fell to 49.7 in October from 51.4, signaling contraction in the sector, while the Services PMI rose to 53.1 from 52.4. The Composite PMI edged up to 52.6, indicating modest overall expansion.
RBA Governor Michele Bullock, speaking in Sydney, refrained from making comments on monetary policy but mentioned plans to modernize Australia’s interbank settlement system, which handles about A$300 billion ($195 billion) in daily transactions.
Despite stable PMI data, the AUD faces headwinds from increasing expectations of a near-term RBA rate cut. Following a rise in the unemployment rate to a four-year high in September, market odds for a 25-basis-point cut jumped to 74%, up from around 50% two weeks ago.
Geopolitical and Trade Developments
The White House confirmed that President Donald Trump will meet Chinese President Xi Jinping next week during the ASEAN Summit, with trade talks expected to resume. The meeting follows the signing of a USD 8.5 billion critical minerals deal between the US and Australia, aimed at securing rare-earth supplies amid China’s export restrictions.
Given Australia’s strong trade ties with China, any developments in Sino-US relations or China’s economic outlook could significantly impact the Australian Dollar.
US Dollar Supported by Fed Expectations and Political Uncertainty
The US Dollar Index (DXY) hovers around 99.00, buoyed by expectations that the Federal Reserve (Fed) will cut rates at its October 29 meeting. According to a Reuters poll, 115 of 117 economists anticipate a 25-bps cut to a range of 3.75%–4.00%, with most expecting two rate cuts before year-end.
Meanwhile, the ongoing US government shutdown, now in its 24th day, has delayed key data releases, including Nonfarm Payrolls, adding to market uncertainty. The CME FedWatch Tool indicates a 98% probability of a rate cut in October and a 92% chance of another in December.
Technical Outlook: AUD/USD Faces Bearish Pressure
The AUD/USD pair trades near 0.6510, hovering around its nine-day Exponential Moving Average (EMA) at 0.6508. The pair remains within a descending channel, reflecting a bearish bias, with the 14-day RSI staying below 50.
Support levels are seen at 0.6414 (four-month low) and 0.6390, with a break below this zone likely to trigger a test of the five-month low near 0.6372. On the upside, a decisive move above 0.6540 (50-day EMA) could improve short-term momentum.
AUD Performance Snapshot
The Australian Dollar was the weakest major currency on Friday, particularly against the British Pound.
| Base | USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF |
|---|---|---|---|---|---|---|---|---|
| AUD | -0.16% | -0.07% | -0.19% | +0.10% | +0.03% | — | -0.10% | -0.06% |