USD Stalls as Rate Cut Odds Surge to 70% Amid Hawkish AUD Data

UPDATE: The US dollar has hit a critical pause as expectations for a December rate cut soar to 70% following dovish remarks from Fed President John Williams. This shift comes just as the market braces for essential economic data, making it a pivotal moment for currency traders.

As of now, the focus is shifting towards upcoming jobless claims and ADP data, both of which could significantly impact the greenback’s value. If the data comes in weaker than anticipated, it may further depress the dollar, while stronger results might offer short-term support.

On the AUD front, recent economic reports have shown a hawkish trend, with significant upside surprises in both inflation and employment figures. The Reserve Bank of Australia (RBA) is now firmly on the sidelines, with the market dismissing any possibility of a rate cut until 2026.

Tomorrow, the release of the Australian monthly CPI data is anticipated, although analysts predict it will have little impact on the RBA’s stance, as the central bank has repeatedly emphasized its preference for quarterly data over monthly fluctuations.

In the currency markets, the AUD/USD pair has recently dipped below October lows but rebounded sharply following Williams’ endorsement of a potential rate cut. Buyers are expected to target a rally towards the 0.6520 resistance level in the near term. Conversely, sellers are eyeing a break below 0.6350 to capitalize on bearish momentum.

The current downward trendline on the four-hour chart suggests that sellers may leverage this trend, positioning themselves for a potential drop to new lows. Buyers, however, are looking for a breakout above this trendline to increase their bullish bets.

Today’s market also awaits the release of the weekly ADP jobs data and the US Consumer Confidence report, alongside the September PPI and Retail Sales figures.

As the Thanksgiving holiday approaches this Thursday, market activity is expected to become more range-bound, adding to the urgency for traders to monitor these key indicators closely.

The movements in the AUD/USD market and the implications of the Fed’s policies are critical not only for traders but also for those monitoring the broader economic landscape, making this a developing story to watch closely.