AUD/USD Consolidates Near Nine-Week Highs as Fed Rate Cut Looms and China Trade Data Awaits

The Australian Dollar steadies as traders weigh contrasting monetary policy trajectories between the RBA and Federal Reserve. Policy divergence continues to underpin AUD strength amid dovish Fed signals. Eyes now turn to China’s monthly trade statistics for potential volatility catalysts this week.

The AUD/USD currency pair has settled into a holding pattern near its best level in over two months, with spot rates hovering around 0.6640 following Friday’s push higher. Traders navigating the early week session are adopting a cautious stance as they await several pivotal central bank announcements, with the Reserve Bank of Australia (RBA) decision scheduled for Tuesday morning.

The RBA and Rate Hike Speculation

Australia’s economic backdrop has become increasingly hawkish. GDP growth accelerated to its strongest annual performance in two years, while labor market conditions remain resilient. RBA Governor Michele Bullock acknowledged recently that current inflation readings have not yet sustainably returned to the 2-3% target range, creating a dilemma for policymakers. These circumstances have sparked market chatter about potential RBA tightening in 2025, positioning the central bank in stark contrast to its US counterpart.

Fed’s Dovish Lean Supporting the Aussie

The divergence in policy direction has become the primary driver for AUD/USD momentum. US economic indicators point to gradual growth deceleration, prompting speculation that the Federal Reserve will execute another 25-basis-point cut at its December meeting. Market pricing via derivatives suggests approximately 90% odds of this cut occurring, while Fed Chair Jerome Powell’s post-announcement remarks will be scrutinized for guidance on future cuts.

This contrasting monetary environment—with the RBA potentially hiking while the Fed continues cutting—creates favorable conditions for the Australian Dollar. When converting 149 USD to AUD at current levels around 0.6640, traders capture the essence of this underlying strength.

China’s Trade Data and Technical Levels

China’s Trade Balance release on Monday will serve as a near-term catalyst. The previous reading of 640.4 billion yuan showed resilience in Chinese exports, a metric that carries weight across Asian currencies. A stronger-than-expected print could provide upside momentum to AUD/USD, while a disappointment might trigger temporary profit-taking from recent highs.

From a technical perspective, the pair’s consolidation near 0.6650—its highest since mid-September—suggests underlying buying interest at these levels. Any corrective dip appears likely to attract fresh bids from traders positioning for continued strength.

The Week Ahead

Market participants remain hesitant to commit to fresh directional positions ahead of Powell’s statements and the Fed’s formal rate decision. However, the structural backdrop tilts decidedly in AUD’s favor. Pullbacks toward 0.6600 or below would likely present compelling entry points for bullish traders, reinforcing the notion that upside momentum remains the path of least resistance for this currency pair.