The AUD/USD pair stayed weak for the third straight day, trading close to 0.6550 during Friday’s Asian session. The pair showed little movement after the release of China’s NBS PMI data, though China’s economic outlook continues to play a major role in shaping the Australian Dollar due to strong trade links between the two countries.
China’s NBS Manufacturing PMI slipped to 49.0 in October from 49.8 in September, slightly above the market forecast of 49.6. On the other hand, the Non-Manufacturing PMI edged up to 50.1, better than both the previous reading and market expectations of 50.0.
Weak AUD Reaction After Trump–Xi Meeting
The Australian Dollar struggled as market sentiment remained cautious following the recent meeting between Donald Trump and Xi Jinping, which failed to deliver any major progress. Trump announced that tariffs on China would be reduced to 47% from 57% and confirmed that the dispute over rare earth exports had been settled. However, he also mentioned that several trade issues are still unresolved, keeping investors on edge.
US Dollar Gains Support from Fed Uncertainty
The US Dollar Index (DXY) held steady around 99.50, as traders assessed the next move by the Federal Reserve. Markets are now pricing in about a 71% chance of a rate cut in December, up from 66% a day earlier, though still down from 91% before Jerome Powell’s comments.
Powell said the Fed may need to wait for more data before making any further decisions, especially as the US government shutdown continues to affect economic reporting. He warned that another rate cut in December is not guaranteed and that the Fed must carefully balance inflation and employment goals.
The Fed recently cut rates by 25 basis points, bringing the benchmark rate to 3.75%–4.00%, with a 10–2 vote. Governor Stephen Miran supported a deeper cut, while Jeffrey Schmid preferred no change. The Fed also confirmed that it will start reducing its mortgage-backed assets and move more toward long-term Treasuries by December 1, which added strength to the US Dollar.
RBA Outlook Bolstered by Strong Inflation
Australia’s Trimmed Mean CPI rose 1.0% for the quarter and 3.0% annually, higher than estimates of 0.8% and 2.7%. The monthly CPI climbed 3.5% in August from a year earlier, beating the 3.1% forecast.
This stronger inflation data reduced the chances of an immediate rate cut by the RBA. Governor Michele Bullock mentioned that the labor market remains tight, even with a small rise in unemployment.
Technical View: AUD/USD Holds Near 0.6550
On the technical side, AUD/USD trades near 0.6550, showing a neutral pattern on the daily chart. The pair remains slightly above the nine-day EMA at 0.6544, which is acting as short-term support.
Resistance is seen at 0.6600, followed by 0.6630. A move above this zone may shift bias to bullish, opening the way to 0.6707, last seen on September 17.
If the pair falls below 0.6544, it may slide toward 0.6450, with further support at the four-month low of 0.6414.
