Aussie Dollar Holds Near Multi-Month Lows Ahead of Warsh

Key Moments

Fed Expectations and Geopolitics Support the Dollar

The AUD/USD pair is confined to a tight range in Asian trading on Friday, with the spot rate fluctuating around the 0.6920-0.6925 band. This follows a modest rebound from levels below 0.6900, which marked the weakest reading since early July, but buyers appear reluctant to extend the recovery.

Attention is centered on upcoming remarks from US Federal Reserve (Fed) Chair Kevin Warsh at the Annual Meetings of the International Monetary Fund (IMF) and World Bank Group in Bangkok. Investors are looking to his comments for further insight into the Fed’s policy outlook in light of the recent energy-driven uptick in US inflation. The signals from this speech are expected to be pivotal for US Dollar (USD) sentiment and could provide the next directional catalyst for AUD/USD.

Ahead of the event, derivatives markets reflect expectations of more than a 90% likelihood that the Fed will raise interest rates at its December meeting. At the same time, US Treasury yields have steadied after a sharp decline the previous day. This stabilization, combined with intensifying tensions in the Middle East, has rekindled demand for the safe-haven USD and is weighing on risk-sensitive currencies such as the Australian Dollar.

In the latest development in the regional conflict, the Iran-backed Houthi group launched a deadly missile strike on the presidential palace in Aden, the interim capital of Yemen’s internationally recognized government. The persistence of geopolitical risk continues to support a premium for the USD and underpins the case for further upside in the currency.

Soft Australian Labor Data Undermines RBA Tightening Bets

On the domestic front, the Australian Dollar is facing its own challenges as investors pare back expectations for additional rate hikes by the Reserve Bank of Australia (RBA). Signs of a meaningful cooling in the labor market are driving this reassessment.

Data released on Thursday by the Australian Bureau of Statistics (ABS) showed that employment fell by 39.3K in September, sharply missing forecasts for a 20K increase. At the same time, the Unemployment Rate edged up to 4.7% from 4.6% in August. These figures suggest a loss of momentum in the jobs market and are dampening the policy-tightening narrative that had previously supported the AUD.

Taken together, the stronger USD backdrop and softer Australian data suggest that the prevailing bias for AUD/USD remains to the downside. Any short-term rallies are likely to encounter selling interest, and analysts see limited scope for sustained upside under current conditions. The pair is on track for modest weekly losses, which would represent a negative close in four of the last five weeks.

AUD/USD – Market Snapshot

Technical Picture: Bias Remains Negative Below Key Averages

From a technical standpoint, the near-term configuration for AUD/USD continues to favor sellers. The pair is trading below the 100-period Exponential Moving Average (EMA) on the 4-hour chart, and repeated failures to break above this dynamic resistance suggest that rebounds are being capped.

The 0.7000 level marks the first significant barrier for any recovery, after the pair’s inability to hold above this handle recently. On the downside, bears are likely to look for a clear move and sustained trading below the 0.6900 region before committing to fresh short positions for an extended decline.

Overall, as long as AUD/USD remains under the 0.6991 resistance area, the broader technical structure supports strategies that sell into strength rather than chase upside momentum.