Australian Dollar moves little following Trade Balance data

The Australian Dollar (AUD) steadies against the US Dollar (USD) on Thursday following Australia’s Trade Balance data, which showed that trade surplus narrowed to 2,936M MoM in November versus 4,353M (revised from 4,385M) in the previous reading.

The Australian Bureau of Statistics (ABS) reported on Thursday that Exports fell by 2.9% MoM in November from a rise of 2.8% (revised from 3.4%) seen a month earlier. Meanwhile, Imports grew by 0.2% MoM in November, compared to a rise of 2.4% (revised from 2.0%) seen in October.

Australia’s mixed November inflation data left the Reserve Bank of Australia’s policy outlook uncertain. Focus now shifts to the quarterly CPI report due later this month for clearer guidance on the RBA’s next policy move.

The Australian Bureau of Statistics (ABS) reported on Wednesday that Australia’s Consumer Price Index rose 3.4% year-over-year (YoY) in November, easing from 3.8% in October. The reading missed market expectations of 3.7% but remained above the RBA’s 2–3% target. It marked the lowest inflation since August, with housing costs increasing at the slowest pace in three months.

US Dollar moves little ahead of Initial Jobless Claims

• The US Dollar Index (DXY), which measures the value of the US Dollar against six major currencies, is holding ground and trading around 98.70 at the time of writing. Traders will keep an eye on the US Initial Jobless Claims data later on Thursday. Attention will be shifted toward the Friday’s US Nonfarm Payrolls (NFP) report, which is expected to show job gains of 55,000 in December, down from 64,000 in November.
• The Institute for Supply Management (ISM) reported on Wednesday that the US Services PMI rose to 54.4 in December from 52.6 in November. This figure came in stronger than the expectation of 52.3.
• Fed Governor Stephen Miran said on Tuesday that the US central bank needs to cut interest rates aggressively this year to support economic momentum. Meanwhile, Minneapolis Fed President Neel Kashkari warned of a risk that the unemployment rate could “pop” higher.
• Richmond Fed President Tom Barkin, a non-voter on the Fed’s rate-setting committee this year, said Tuesday that interest rate adjustments will need to be “finely tuned” to incoming data, citing risks to both the Fed’s employment and inflation objectives, according to Reuters.
• According to the CME Group's FedWatch tool, Fed funds futures continue to price in about an 88.9% probability that the US central bank will keep rates unchanged at its January 27–28 meeting.
• Traders expect two additional Federal Reserve rate cuts in 2026. Markets are bracing for US President Donald Trump to nominate a new Fed chair to replace Jerome Powell when his term ends in May, a move that could tilt monetary policy toward lower interest rates.
• China’s RatingDog Services Purchasing Managers’ Index (PMI), released on Monday, declined to 52.0 in December from 52.1 in November. RatingDog reported last week that Manufacturing PMI climbed to 50.1 in December from 49.9 in November. It is important to note that any change in the Chinese economy could impact the AUD as China and Australia are close trading partners.
• Australia’s CPI was unchanged at 0% month-on-month (MoM) in November, matching October’s reading. Meanwhile, the RBA’s Trimmed Mean CPI rose 0.3% MoM and 3.2% YoY. Separately, seasonally adjusted Building Permits surged 15.2% MoM to a near four-year high of 18,406 units in November 2025, rebounding from a downwardly revised 6.1% fall previously. Annual approvals jumped 20.2%, reversing a revised 1.1% decline in October.
• The Australian Financial Review (AFR) suggested that the RBA may not be done tightening this cycle. The poll indicates that inflation is expected to remain stubbornly elevated over the coming year, fueling expectations of at least two additional rate hikes.

Australian Dollar trades near 0.6700 after pulling back from 15-month highs

AUD/USD is trading around 0.6720 on Thursday. The technical analysis of the daily chart indicates that the pair remains within the ascending channel pattern, suggesting a persistent bullish bias. However, the 14-day Relative Strength Index (RSI) at 64.42 suggests a bullish momentum.

The AUD/USD pair may target the 0.6766, the highest level since October 2024, followed by the upper boundary of the ascending channel near 0.6840.

The initial support lies at the lower ascending channel boundary around 0.6720, followed by the nine-day Exponential Moving Average (EMA) of 0.6706. A break below the confluence support zone could expose the AUD/USD pair to the area around the 50-day EMA at 0.6626.