The Australian Dollar (AUD) ended Friday’s session with a gain of 0.38%, contributing to a weekly advance of 0.58%, as the US Dollar trimmed some of its weekly gains and US data reinforced expectations that the Federal Reserve would hold rates steady in October [1]. The AUD/USD pair closed at 0.6983, supported by softer US sentiment, even as renewed bets for a December rate hike emerged [1].
US consumer sentiment weakened, with the Consumer Sentiment Index for October dropping to 46.3 from 48.1, missing estimates of 47.6. Inflation expectations rose, with the 1-year outlook increasing from 4.6% to 4.7% and the 5-year outlook from 3.4% to 3.5% [1]. FOMC minutes showed unanimous support for a rate hike, but revealed division among members: some viewed it as precautionary, while others saw it as the start of a tightening cycle. Fed Governor Waller expressed support for more rate hikes, though not necessarily consecutively, and St. Louis Fed's Musalem highlighted persistent inflation and a strong labor market as reasons for further Fed action [1].
Money markets indicate an 81% probability that the Federal Reserve will keep rates unchanged in October, but also an 81% chance of a 25-basis-point increase in December, according to Prime Terminal data [1]. Wall Street posted losses despite a solid earnings session, with US equities nearing record highs. The US Dollar Index (DXY) rose 0.12% to 102.73 [1].
Looking ahead, Australia’s economic calendar will feature the release of the Reserve Bank of Australia (RBA) minutes and employment data, which are expected to influence the Aussie Dollar’s direction. In the US, traders will focus on upcoming inflation data, retail sales, Fed speeches, and employment reports [1].
Technically, AUD/USD trades at 0.6984, maintaining a bearish near-term tone as it remains below the triple simple moving average cluster at 0.7089 and a horizontal barrier at 0.7198. The Relative Strength Index (14) near 40 suggests weak but not extreme bearish momentum, indicating a corrective phase rather than an oversold capitulation. Immediate resistance is seen at the 50/100/200-day simple moving averages near 0.7089, with further resistance at 0.7198. Rising trend-line supports from the 0.68–0.69 area underpin the broader structure [1].
CONCLUSION
The Aussie Dollar’s weekly gains reflect market optimism that the Fed will pause rate hikes in October, despite hawkish rhetoric and rising inflation expectations. Upcoming RBA minutes and employment data in Australia, along with key US economic releases, will be pivotal for the AUD/USD’s direction. Technical resistance and underlying supports suggest the pair may face selling pressure on rallies, but remains structurally supported.