CFD Trading Rate Australian Dollar vs US Dollar (AUDUSD)

The meeting on Tuesday is the last meeting for the year and the next meeting is not due until 18 February. AUD was last at 0.6448, OCBC’s FX analysts Frances Cheung and Christopher Wong note.

Risks remain skewed to the downside

“We expect cash rate to remain on hold at 4.35% as services inflation remains sticky and labour market is fairly tight. The risk is an earlier than expected dovish pivot as softer than expected 3Q GDP print last week saw markets shifted expectations to fully price in a cut at Apr’s meeting. There were also light chatters if RBA may even need to cut earlier at the Feb meeting.”

“Tariff worries, slowing growth momentum and anticipation for earlier RBA cuts are some factors that may continue to undermine AUD in the short term, unless AU labour market report on Thu comes in hotter or USD reverses lower.”

“Daily momentum is mild bearish while RSI fell. Risks remain skewed to the downside. Support at 0.6380, 0.6350 (2024 low). Break out risks a sharp move towards 0.6270 (2023 low). Resistance at 0.6485 (21 DMA).”

Sharp drop appears excessive, but there is scope for Australian Dollar (AUD) to retest 0.6375 before stabilisation can be expected. The risk for AUD remains on the downside, likely towards the year-to-date low, near 0.6350, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

Risk for AUD remains on the downside

24-HOUR VIEW: “We expected AUD to consolidate between 0.6435 and 0.6475 last Friday. However, AUD plummeted and closed at 0.6390 (-0.96%), its lowest daily closing since Apr this year. Although the sharp drop appears to be excessive, there is scope for AUD to retest last Friday’s low near 0.6375 before a stabilisation can be expected. The major support at 0.6350 is unlikely to come under threat. On the upside, should AUD break above 0.6430 (minor resistance is at 0.6415), it would mean that the weakness has stabilised.”

1-3 WEEKS VIEW: “Last Thursday (05 Dec, spot at 0.6430), we indicated that ‘the risk for AUD has shifted to the downside.’ However, we pointed out that, ‘the 0.6380 level is expected to provide significant support.’ On Friday, AUD broke below 0.6380, reaching a low of 0.6373. Despite the breach of the support level, downward momentum has not increased much. That said, the risk for AUD remains on the downside, likely towards the year-to-date low, near 0.6350. To keep the momentum going, AUD must not break above the ‘strong resistance’ of 0.6450 (level previously at 0.6490).”

• AUD/USD jumps to near 0.6420 with investors focusing on the RBA monetary policy announcement on Tuesday.
• The RBA is expected to leave interest rates steady at 4.35%.
• Investors expect the Fed to cut its key borrowing rates next week by 25 bps to 4.25%-4.50%.

The AUD/USD pair finds temporary support and advances to near 0.6420 in Monday’s European session after posting a fresh four-month low near 0.6370 on Friday. The Aussie pair rebounds slightly with investors focusing on the Reserve Bank of Australia’s (RBA) monetary policy decision, which will be announced on Tuesday.

Market experts expect the RBA to leave interest rates unchanged at 4.35% but would temper its hawkish tone as the Australian Q3 Gross Domestic Product (GDP) growth came in weaker-than-expected, a scenario that would be favorable for the Australian Dollar (AUD).

Analysts at ANZ and Westpac expect the RBA to start reducing interest rates from May 2025. They have pushed their forecasts from March 2025 amid concerns over sticky price pressures.

Meanwhile, the US Dollar (USD) ticks higher even though traders are confident that the Federal Reserve (Fed) will cut interest rates by 25 basis points (bps) to 4.25%-4.50% in the policy meeting on December 18. This week, investors will pay close attention to the United States (US) Consumer Price Index (CPI) data for November, which will release on Wednesday.

The near-term trend of the AUD/USD pair is bearish as all short-to-long-term Exponential Moving Averages (EMAs) are declining.

The 14-day Relative Strength Index (RSI) wobbles below 40.00, suggesting that a bearish momentum is intact.

More downside towards the August low of 0.6348 and the round-level support of 0.6300 would appear if the Aussie pair fails to hold recovery above the round-level support 0.6400.

On the flip side, a decisive recovery above the November 25 high of 0.6550 will drive the asset towards the round-level resistance of 0.6600, followed by September 11 low of 0.6622.

AUD/USD daily chart

• AUD/USD trades in positive territory near 0.6400 in Monday’s early Asian session. 
• US Nonfarm Payrolls was stronger than expected in November, rising by 227,000 vs. 36,000 prior. 
• The RBA is expected to hold the interest rate steady at 4.35% at its meeting on Tuesday.

The AUD/USD pair gains ground to around 0.6400 on the weaker US Dollar (USD) during the Asian session on Monday. There are no Federal Reserve (Fed) speakers this week due to the media blackout. All eyes will be on the Reserve Bank of Australia (RBA) interest rate decision on Tuesday, with no change in rates expected. 

Data released by the US Bureau of Labor Statistics (BLS) on Friday showed that the US Nonfarm Payrolls (NFP) increased by 227,000 in November, compared with an upwardly revised 36,000 in October. This reading came in better than the estimation of 200,000. Meanwhile, the Unemployment Rate ticked up to 4.2% in November from the previous reading of 4.1%. 

Several Fed officials have spoken over the past few weeks, and there is near unanimity that the labor market is cooling but healthy. The Greenback edged lower with the immediate reaction to Nonfarm Payrolls data. Financial markets are now pricing in nearly 70% odds of a 25 basis points (bps) rate cut by the Federal Reserve (Fed) at the upcoming meeting on December 17-18, according to the CME FedWatch tool.

 On the Aussie front, the Australian central bank is anticipated to keep the benchmark interest rate steady at 4.35%. RBA Governor Bullock said earlier this month that “underlying inflation is still too high to be considering lowering the cash rate target in the near term.” However, Australia’s Q3 GDP growth report was weak and suggests a dovish surprise cannot be ruled out. 

 The market has brought forward the timing of the first rate cut to April versus May before. Market players will keep an eye on the RBA Press Conference. The dovish comments from the policymakers could exert some selling pressure on the Aussie against the USD. 

• On Friday, AUD/USD dropped near its August lows at 0.6350, following the release of the US NFP report for November.
• The US jobs report showed a much stronger than expected increase in jobs.
• Rising bets for an early interest rate cut by the Reserve Bank of Australia added bearish pressure on the pair.

The AUD/USD pair experienced significant weakness on Friday, sinking near its August lows at 0.6350 after the release of the US Nonfarm Payrolls (NFP) report for November.

The data showed a much stronger than expected increase in jobs, while rising expectations for an interest rate cut by the Reserve Bank of Australia (RBA) added pressure to the Australian Dollar. Additionally, weaker than expected domestic GDP growth figures further dampened the outlook for AUD/USD.

Daily digest market movers: AUD/USD sinks near August lows after US NFP report

• US Nonfarm Payrolls for November came in at 227,000, far exceeding the previous 12,000 increase and the expected 200,000 figure.
• The Unemployment Rate ticked up to 4.2% from 4.1%.
• Monthly Average Hourly Earnings rose by 0.4%, above the expected 0.3%, steady from the previous 0.4%.
• University of Michigan Consumer Sentiment for December beat estimates at 74.0, improving from 71.8 previously.
• Five-year inflation expectations dropped to 3.1%, down from 3.2% in November.
• Rising bets for an early interest rate cut by the Reserve Bank of Australia contribute to bearish sentiment for AUD/USD.

AUD/USD technical outlook: Bearish outlook with RSI approaching oversold levels

The technical outlook for AUD/USD remains bearish as the pair continues to struggle near its August lows. The Relative Strength Index (RSI), a momentum oscillator that measures the speed and change of price movements, is approaching oversold conditions, signaling severe selling pressure. Similarly, the Moving Average Convergence Divergence (MACD), which tracks the relationship between two exponential moving averages, is also showing bearish dominance. However, these movements might have become overextended, so an upward correction may come.

• The US Dollar strengthened ahead of the weekly close on the back of mixed data.
• The Reserve Bank of Australia will announce its decision on monetary policy next week.
• AUD/USD fell to its lowest since August, maintaining the bearish pressure.

The US Dollar (USD) soared in the last trading session of the week, with the AUD/USD pair falling towards 0.6380, a level last seen in August. Without data releases in Australia, the market focused on the United States (US) macroeconomic developments.

Mixed employment figures initially weighed on the USD, but a better-than-anticipated preliminary estimate of the US Consumer Sentiment Index flipped the coin. The index unexpectedly improved to 74 in December from 71.8 in the previous month, surpassing the expected 73.

Beforehand, the US published the November Nonfarm Payroll (NFP) report. The headline figure showed 227K new jobs were added in the month, higher than the 200K anticipated by market analysts. Also, the Unemployment Rate ticked marginally higher, from 4.1% previously to the expected 4.2%.

The NFP report also showed that the Labor Force Participation Rate edged lower to 62.5%, while the annual wage inflation, as measured by the change in the Average Hourly Earnings, held steady at 4%, coming in above the market forecast of 3.9%. The uptick in inflationary pressures fueled bets of an upcoming December rate cut, now at roughly 83% from 71% on Thursday, according to the CME FedWatch Toll.

Meanwhile, the Reserve Bank of Australia (RBA) will have a monetary policy meeting next week. The central bank will announce its decision, and it is widely anticipated that interest rates will be kept on hold. The Official Cash Rate (OCR) has been steady at 4.35% since November 2023, when the RBA delivered its latest interest rate hike.

Growth in Australia has been tepid, and RBA’s Governor Michele Bullock should take note of that. The earliest a rate cut is expected, however, is February 2025, with mounting bets it could be delayed up to March.

AUD/USD Technical Outlook

The Australian Dollar (AUD) pressures its multi-month lows against the USD. The AUD/USD pair trades around 0.6370, with the next support level at 0.6360, the April 2024 monthly low, followed by 0.6347, the low posted in August. Beyond the latter, market players will likely target the 0.6300 mark.

The former weekly low at 0.6398 provides resistance ahead of the 0.6430 price zone.

The current price movements are likely part of a consolidation phase, mostly likely between 0.6435 and 0.6475. In the longer run, risk for AUD has shifted to the downside; the 0.6380 level is expected to provide significant support, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

The 0.6380 level is expected to provide significant support

24-HOUR VIEW: “After AUD plummeted to a low of 0.6399 two days ago, we highlighted yesterday that ‘the weakness in AUD could retest the 0.6400 level before stabilisation is likely.’ We added, ‘to keep the oversold momentum going, AUD must remain below 0.6460, with minor resistance at 0.6445.’ Our view did not turn out, as AUD traded in a 0.6422/.6455 range, closing at 0.6452. The current price movements are likely part of a consolidation phase, most likely between 0.6435 and 0.6475.”

1-3 WEEKS VIEW: “We revised our view for AUD to negative yesterday (05 Dec, spot at 0.6430), indicating that ‘the risk for AUD has shifted to the downside.’ However, we pointed out, ‘any decline is expected to face significant support at 0.6380.’ We also pointed out that ‘to sustain the increase in momentum, AUD must not break above the ‘strong resistance’ level, currently at 0.6490.’ There is no change in our view.”

• AUD/USD attracts fresh sellers and is pressured by a combination of factors.
• A softer risk tone and bets for an early RBA rate cut undermine the Aussie.
• Subdued USD demand fails to lend any support ahead of the US NFP report.

The AUD/USD pair maintains its offered tone through the first half of the European session on Friday and currently trades near the 0.6425 region, down around 0.40% for the day. 

Spot prices remain close to the lowest level since August touched on Wednesday and seem vulnerable, though bearish traders opt to wait for more cues about the Federal Reserve's (Fed) rate-cut path before placing fresh bets. Hence, the focus will remain glued to the US Nonfarm Payrolls (NFP) report. The crucial jobs data will guide the Fed policymakers' decision at the December meeting and drive the US Dollar (USD) demand, which, in turn, should provide a fresh impetus to the AUD/USD pair. 

Heading into the key data risk, expectations for a less dovish Fed, along with a slight deterioration in the global risk sentiment, help limit the recent USD decline to a three-week low and act as a headwind for the perceived riskier Australian Dollar (AUD). Apart from this, rising bets for an early interest rate cut by the Reserve Bank of Australia (RBA), bolstered by this week's softer domestic GDP growth figures released earlier this week, contribute to the offered tone surrounding the AUD/USD pair. 

Apart from this, persistent geopolitical tensions, China's economic woes and concerns about US President-elect Donald Trump's lingering trade tariffs suggest that the path of least resistance or the risk-sensitive Aussie is to the downside. Hence, any attempted recovery might still be seen as a selling opportunity and runs the risk of fizzling out rather quickly. Nevertheless, the AUD/USD pair seems poised to register weekly losses and could possibly post its lowest 2024 weekly close.

• AUD/USD gains higher US Initial Jobless Claims weigh on the US Dollar.
• The US NFP data will significantly influence the Fed’s likely interest rate action in the policy meeting on December 18.
• Weak Australian Q3 GDP data has bolstered RBA dovish bets.

The AUD/USD pair ticks higher to near 0.6440 but remains trades inside Wednesday’s trading range in North American trading hours on Thursday. The Aussie pair gains slightly as the United States (US) Initial Jobless Claims data for the week ending November 29 remained higher than expected. The data showed that individuals claiming jobless benefits were 224K, higher than estimates and the prior release of 215K.

The US Dollar Index (DXY), which gauges Greenback's value against six major currencies, slides below 106.00. The next move in the US Dollar will be projected the US Nonfarm Payrolls (NFP) data for November, which will be released on Friday.

Investors will pay close attention to the US official labor market data to get fresh cues about whether the Fed will cut interest rates again in its policy meeting on December 18. The Fed started its policy-easing cycle in September as officials were worried about deteriorating labor demand but were confident about inflation remaining on a sustainable path towards the bank’s target of 2%.

According to the CME FedWatch tool, there is a 77% chance that the Fed will reduce interest rates by 25 bps to 4.25%-4.50%, while the rest support leaving them unchanged.

The US NFP report is expected to show that the economy added 200K jobs. Economists estimate the Unemployment Rate to have accelerated to 4.2% from the former reading of 4.1%.

Meanwhile, the outlook of the Australian Dollar (AUD) has weakened as the Reserve Bank of Australia (RBA) is expected to start reducing interest rates from the April meeting next year. RBA dovish bets were bolstered by weak Australian Q3 Gross Domestic Product (GDP) data.

The near-term trend of the AUD/USD pair is bearish as the 20-day Exponential Moving Average (EMA), which trades around 0.6500 is declining.

The 14-day Relative Strength Index (RSI) slides below 40.00, suggesting a strong bearish momentum.

More downside towards the August low of 0.6348 and the round-level support of 0.6300 would appear if the Aussie breaks below Wednesday’s low of 0.6400.

On the flip side, a decisive recovery above the November 25 high of 0.6550 will drive the asset towards the round-level resistance of 0.6600, followed by the September 11 low of 0.6622.

AUD/USD daily chart

The Australian Dollar (AUD) traded lower. AUD/USD was last seen at 0.6438 levels, OCBC’s FX analysts Frances Cheung and Christopher Wong notes.

Mild bullish momentum fades

“3Q GDP missing estimate was the trigger. Markets have moved to fully price in a 25bp rate cut at Apr meeting and there were also light chatters that RBA may even need to move earlier at the Feb meeting. Tariff worries, slowing global growth concerns and anticipation for earlier RBA cuts are some factors that may undermine AUD in the short term, unless USD reverses lower.”

“Mild bullish momentum faded while RSI fell. Risks remain skewed to the downside. Support at 0.64, 0.6350 (2024 low). AUD would need to reclaim above 0.6510 to nullify AUD bears for now.”

The weakness in the Australian Dollar (AUD) could retest the 0.6400 level before stabilization is likely. In the longer run, risk for AUD has shifted to the downside; the 0.6380 level is expected to provide significant support, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

Risk for AUD has shifted to the downside

24-HOUR VIEW: “When AUD was at 0.6480 yesterday, we noted that ‘the underlying tone still appears to be a bit soft, and there is room for AUD to test 0.6440.’ We pointed out, ‘a clear break below this level still seems unlikely.’ We did not expect AUD to plummet to a low of 0.6399. Not surprisingly, conditions are oversold. However, with no signs of stabilisation just yet, AUD could retest the 0.6400 level. This time around, a clear break below this level seems unlikely. The next support at 0.6380 is not expected to come into view. To keep the oversold momentum going, AUD must remain below 0.6460, with minor resistance at 0.6445.”

1-3 WEEKS VIEW: “In our most recent narrative from last Thursday (28 Nov, spot at 0.6495), we highlighted that “the current price movements are likely part of a consolidation phase.” We expected AUD to ‘consolidate between 0.6440 and 0.6550 for the time being.’ Yesterday, in a sudden move, AUD plunged to 0.6399 before closing at 0.6430 (-0.88%). Although the rapid increase in momentum suggests the risk has shifted to the downside, any decline is expected to face significant support at 0.6380. To sustain the increase in momentum, AUD must not break above the ‘strong resistance’ level, currently at 0.6490.”

• AUD/USD plummets to near 0.6400 as the Australian Dollar weakens after slower-than-expected Australian Q3 GDP growth.
• Soft Aussie Q3 GDP data has boosted expectations for RBA interest rate cuts in April 2025.
• The US Dollar gains higher ahead of Fed Powell’s speech.

The AUD/USD pair dives more than 1% to near the round-level support of 0.6400 in Wednesday’s European session. The Aussie pair plummets as the Australian Dollar (AUD) has been hit hard by weaker-than-projected domestic output data for the third quarter of this year.

The Australian Bureau of Statistics reported that the Australian economy surprisingly expanded at a slower-than-expected pace of 0.8% compared to the same quarter of the previous year against the 1% growth seen in the previous quarter of this year. Economists estimated the annualized Q3 GDP growth of 1.1%. On a quarterly basis, the Australian economy expanded by 0.3%, slower than expectations of 0.4% but faster than the former reading of 0.2%.

Weak Q3 GDP data has boosted the Reserve Bank of Australia's (RBA) dovish bets. Growing concerns over Australian economic growth have prompted expectations that the RBA could start reducing interest rates from its policy meeting in April 2025.

Meanwhile, a slight upside move in the US Dollar (USD) has also weighed on the Aussie pair. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, rises to nearly 106.60 ahead of Federal Reserve (Fed) Chair Jerome Powell’s speech at 18:45 GMT. Fed Powell is expected to provide cues about whether the central bank will continue easing its monetary policy further in its meeting on December 18.

In today’s session, investors will also focus on the United States (US) ADP Employment Change and the ISM Services PMI data for November.

• AUD/USD is trading within a range on the 4-hour chart. 
• It looks poised to rise further and fill an open gap on the charts. 

AUD/USD is trading within a range encompassed by the ceiling at around 0.6540 (green line) and floor at about 0.6440 (red line). The pair is probably in a short-term sideways trend. 

AUD/USD 4-hour Chart 

AUD/USD is currently climbing within the range towards a gap that opened on Monday (red rectangle). Technical analysis theory says that “the market abhors a gap” so there is a good chance it will continue higher until it fills the gap, which lies between 0.6515 and 0.6524. 

A break above the high of the last period at 0.6505 would provide added confirmation  of a gap-fill move up to at least 0.6524. 

The (blue) Moving Average Convergence Divergence (MACD) indicator looks poised to cross above its red signal line. If it completes a cross it will give a buy signal and reinforce the case for price moving higher. 

Room for the Australian Dollar (AUD) to retest the 0.6440 support before a more sustained rebound can be expected. In the longer run, AUD is expected to consolidate between 0.6440 and 0.6550 for the time being, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

AUD is expected to consolidate between 0.6440 and 0.6550

24-HOUR VIEW: “Our view for AUD to trade in a range between 0.6485/0.6530 was incorrect. Instead of trading in a range, AUD fell to a low of 0.6443 and then rebounded to close at 0.6476, down by 0.66% for the day. Despite the relatively sharp drop, there has been no significant increase in momentum. That said, there is room for AUD to retest the 0.6440 support before a more sustained rebound can be expected. A clear break below 0.6440 seems unlikely for now. Resistance is at 0.6495; a break of 0.6510 would indicate that the current downward pressure has faded.”

1-3 WEEKS VIEW: “In our most recent narrative from last Thursday (28 Nov, spot at 0.6495), we highlighted that ‘the current price movements are likely part of a consolidation phase.’ We expected AUD to ‘consolidate between 0.6440 and 0.6550 for the time being.’ While AUD dropped and approached the bottom of our expected range yesterday (low has been 0.6443), there has been no significant increase in momentum. In other words, we continue to hold the same view for now. Looking ahead, for a sustained decline, AUD must break and hold below 0.6425.”

• AUD/USD gaps open on Monday and declines. 
• The pair is in a sideways range and will probably continue oscillating. 
• Gaps have a habit of getting filled, suggesting an up leg will eventually develop within the range. 

AUD/USD is falling within a range encompassed by the green (ceiling) and red (floor) dashed lines on the chart below. 

AUD/USD 4-hour Chart 

At the start of trading on Monday the pair opened a gap between between 0.6515 and 0.6524 (green rectangle). It has been selling off ever since. 

AUD/USD will probably eventually fill the gap since technical analysis theory says that “the market abhors a gap”. This means gaps do not tend to remain open. When they occur within a sideways market they usually close more quickly.

It is possible the Aussie pair might fall to the region of the range lows in the 0.6440s first before recovering and filling the open gap. 

Alternatively it may stop falling before it reaches the bottom of the range and recover. At the moment there are no signs of the selling letting up. 

The (blue) Moving Average Convergence Divergence (MACD) indicator has crossed below its red signal line, which is a sell signal and reinforces the case for price falling towards the range lows.

• AUD/USD attracts some sellers on Monday amid a goodish pickup in the USD demand.
• Bets for slower Fed rate cuts lift the US bond yields higher and lend support to the USD.
• US-China trade war concerns further contribute to driving flows away from the Aussie.

The AUD/USD pair starts a new week/month on a weaker note and slides back below the 0.6500 psychological mark during the Asian session, snapping a three-day winning streak. Moreover, the fundamental backdrop supports prospects for the resumption of the recent downtrend witnessed over the past two months or so. 

Worries about the second wave of the US-China trade war after US President-elect Donald Trump takes office in January drive some haven flows towards the US Dollar (USD) and undermine the China-proxy Australian Dollar (AUD). In fact, Trump has pledged big tariffs against America’s three biggest trading partners – Mexico, Canada and China. Furthermore, Trump threatened a 100% tariff on the so-called 'BRICS' nations – Brazil, Russia, India, China, and South Africa – if they replace the USD with another currency for international transactions. 

Meanwhile, the growing market conviction that Trump's tariff plans could push consumer prices higher and restrict the Federal Reserve (Fed) from easing its monetary policy further triggers a fresh leg up in the US Treasury bond yields. Apart from this, persistent geopolitical risks stemming from the protracted Russia-Ukraine war assist the safe-haven USD in staging a recovery from a nearly three-week low touched on Friday. This overshadows the Reserve Bank of Australia's (RBA) hawkish stance and does little to lend support to the Aussie. 

Data released over the weekend showed that China’s official Manufacturing Purchasing Managers' Index (PMI) edged up to 50.3 in November from 50.2, while the NBS Non-Manufacturing PMI eased to 50.0 during the reported month from 50.2 in October. Adding to this, China's Caixin Manufacturing PMI jumped to 51.5 in November from 50.3.  Moreover, investors remain hopeful that the government will introduce more stimulus to bolster domestic demand. This, however, fails to impress bulls or provide any respite to the AUD/USD pair. 

The aforementioned fundamental backdrop suggests that the path of least resistance for spot prices is to the downside, though traders might refrain from placing aggressive bets ahead of key US macro data scheduled at the beginning of a new week. This week's busy US economic docket kicks off with the release of the ISM Manufacturing PMI, which might influence the USD and allow traders to grab short-term opportunities. The focus, however, remains glued to the closely watched US jobs data, or the Nonfarm Payrolls (NFP) report on Friday.

• AUD/USD attracts some sellers to around 0.6510 in Monday’s early Asian session, down 0.21% on the day. 
• Trump tariff threats and the geopolitical risks weigh on the Aussie, but hawkish RBA bets might cap its downside.
• The Australian Retail Sales and the USI SM Manufacturing PMI will be the highlights on Monday. 

The AUD/USD pair weakens to near 0.6510 despite the renewed US Dollar demand during the early Asian session on Monday. Investors will keep an eye on the Australian Retail Sales and the USISM Manufacturing Purchasing Managers' Index (PMI), which is due later on Monday. 

The US President-elect Donald Trump flagged his intention to impose a 25% tariff on all products from Mexico and Canada and an additional 10% on goods from China, exerting some selling pressure on the China-proxy Australian Dollar (AUD) as China is the largest trading partner to Australia. Furthermore, heightened geopolitical tension and economic uncertainty could benefit the US Dollar's safe-haven status and act as a headwind for AUD/USD.

On the other hand, the hawkish remarks from the Reserve Bank of Australia (RBA) might help limit the AUD’s losses. The RBA Governor Michele Bullock said last week that “underlying inflation is still too high to be considering lowering the cash rate target in the near term." 
 
On the USD’s front, the ISM PMI will take center stage later in the day. Manufacturing PMI is expected to improve to 47.5 in November from 46.5 in October. In case of the stronger-than-expected outcome, this could lift the Greenback against the Aussie. 

• AUD/USD attracts buyers for the third straight day amid a modest USD weakness. 
• Geopolitical risks and trade war concerns keep a lid on further gains for the Aussie.
• Bets for slower Fed rate cuts limit the USD losses and contribute to capping the pair.

The AUD/USD pair trims a part of intraday gains to a multi-day top and trades just above the 0.6500 psychological mark during the first half of the European session on Friday, up for the third consecutive day. 

The US Dollar (USD) struggles to capitalize on Thursday's modest gains and touches a fresh two-week low amid bets for another 25 basis points interest rate cut by the Federal Reserve (Fed) in December. This is seen as a key factor lending support to the AUD/USD pair, though bulls seem reluctant amid worries that US President-elect Donald Trump's tariff plans could trigger a US-China trade war. 

Meanwhile, the US Personal Consumption Expenditure (PCE) Price Index released on Wednesday showed that the progress in lowering inflation stalled in October. This comes on top of the growing market conviction that Trump's expansionary policies will boost inflation, which should restrict the Fed from easing its policy further. This helps limit the USD losses and caps the AUD/USD pair. 

Apart from this, persistent geopolitical tensions stemming from the protracted Russia-Ukraine war warrant some caution before placing aggressive bullish bets around the risk-sensitive Aussie. In the absence of any relevant market-moving economic data from the US on Friday, the AUD/USD pair remains at the mercy of the USD price dynamics and seems poised to end the week on a flattish note. 

That said, the official Chinese PMIs, due for release over the weekend, will play a key role in influencing sentiment surrounding the China-proxy Australian Dollar (AUD). The focus will then shift to important US macro data scheduled at the beginning of a new month, including the closely watched Nonfarm Payrolls (NFP) report, and the third quarter Australian GDP growth figures next week.

There has been a slight increase in upward momentum; the Australian Dollar (AUD) could drift higher but is unlikely to break the resistance at 0.6525. In the longer run, AUD is expected to consolidate between 0.6440 and 0.6550 for the time being, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

AUD can drift higher but is unlikely to break above 0.6525

24-HOUR VIEW: “Two days ago, we were of the view that AUD ‘could break below 0.6440, but it might not be able to maintain a foothold below this level.’ After AUD dropped to 0.6434 and rebounded, we indicated yesterday that ‘downward momentum appears to have eased with the strong rebound.’ We held the view that AUD ‘is likely to trade in a range today, probably between 0.6440 and 0.6500.’ AUD then traded in a narrower range than expected (0.6457/0.6500), closing at 0.6497, higher by 0.36%. There has been a slight increase in momentum. Today, AUD could drift higher, but it is unlikely to break the resistance at 0.6525 (there is another resistance at 0.6510). On the downside, support levels are at 0.6480 and 0.6460.”

1-3 WEEKS VIEW: “In our latest narrative from Tuesday (26 Nov, spot at 0.6470), we pointed out that AUD ‘must break and hold below 0.6440 before a move to 0.6400 can be expected.’ We indicated, ‘The likelihood of AUD breaking clearly below 0.6440 will increase in the next few days, provided that 0.6525 is not breached.’ Yesterday, AUD rose to 0.6500, closing on a firm note at 0.6497 (+0.36%). While our ‘strong resistance’ level has not been breached yet, downward momentum has largely faded. The current price movements are likely part of a consolidation phase. For the time being, we expect AUD to trade between 0.6440 and 0.6550.”