AUD/USD Rises as RBA Maintains Hawkish Tone While Fed Signals Rate Cuts
By Ghiles Guezout, FXStreet — December 9, 2025
The Australian Dollar (AUD) strengthened against the US Dollar (USD) on Tuesday, with the AUD/USD currency pair climbing to around 0.6640, marking a 0.20% gain on the day. This upward move is largely supported by the Reserve Bank of Australia’s (RBA) recent hawkish stance, which contrasts sharply with growing market anticipation of Federal Reserve (Fed) interest rate cuts in the United States.
RBA’s Hawkish Outlook Bolsters the Aussie
RBA Governor Michele Bullock’s firm remarks have reinforced confidence in the Australian Dollar. Bullock indicated that further rate cuts were unlikely, noting that the RBA board had even debated scenarios under which a rate hike might become necessary. This signals a tightening or at least a maintenance of monetary conditions in Australia, suggesting the central bank is not prepared to ease policy despite inflation pressures.
Inflation in Australia remains stubbornly above the RBA’s target range of 2% to 3%, limiting the bank’s flexibility to reduce rates. In fact, the RBA has hinted that renewed tightening in 2026 could occur if price pressures persist. This outlook has helped underpin the AUD’s gains, as investors adjust to a more restrictive monetary policy path in Australia relative to the United States.
Fed’s Expected Rate Cuts Weigh on the US Dollar
Meanwhile, expectations of imminent rate cuts by the Federal Reserve have pressured the US Dollar. Recent economic data from the US points to a gradual slowdown in economic activity and labor market conditions. The latest Personal Consumption Expenditures (PCE) report showed core inflation steady at 2.8% year-over-year, above the Fed’s medium-term target, leaving the door open for further monetary accommodation.
The CME FedWatch tool assigns nearly a 90% probability to a 25-basis-point rate cut at the Fed’s upcoming interest rate decision scheduled for Wednesday. This growing consensus has dampened demand for the USD in the lead-up to the announcement. However, investors remain cautious as they await key labor market data for further guidance, including the ADP employment report and Job Openings and Labor Turnover Survey (JOLTS) — both expected later on Tuesday.
Key Data Ahead and Technical Outlook
Looking ahead, Australia’s November labor market report, due Thursday, is expected to show a slowdown in job creation to approximately 20,000 new positions compared to the prior month’s 42,200, alongside a slight increase in the unemployment rate to 4.4%. These data will be closely scrutinized for clues about the RBA’s future policy stance.
On the technical front, the AUD/USD is trading near 0.6640, supported by a rising 100-period Simple Moving Average (SMA) currently at 0.6534, which serves as dynamic support. The Relative Strength Index (RSI) stands at 65, indicating bullish momentum without reaching overbought territory. Resistance levels are positioned at 0.6650 and further up at 0.6707, while support is established at 0.6609. As long as the pair holds above key support levels, the intraday outlook remains positive.
Divergent Monetary Policies Favor the AUD
Overall, the diverging monetary policies between the RBA and Fed are a driving force behind the AUD/USD direction. The RBA’s hawkish tone amid sustained inflation contrasts with anticipated Fed easing, making the Australian Dollar more attractive to investors. Combined with a generally supportive risk appetite environment and a softer US Dollar, the AUD/USD pair is consolidating gains and attempting to extend its advance.
Summary
- AUD/USD climbed to around 0.6640, gaining 0.20% on the day.
- RBA Governor Bullock’s hawkish comments reduce expectations of further rate cuts in Australia.
- The Fed is widely expected to cut rates by 25 basis points, weakening the US Dollar.
- Australia’s inflation remains above target, maintaining a restrictive outlook.
- November Australian labor market data will be a key near-term factor.
- Technically, AUD/USD remains supported with bullish momentum intact.
Investors will watch closely as upcoming US data and the Fed’s policy announcement could further influence the currency pair’s direction in the short term.
About the Author:
Ghiles Guezout is a market analyst at FXStreet, specializing in fundamental and technical analysis across stock markets, forex, and cryptocurrencies.
This article contains forward-looking statements reflecting market conditions as of December 9, 2025. Readers should conduct independent research and consider their own investment objectives before making trading decisions.