AUD/USD caught in a tug-of-war between bulls and bears! The market awaits a breakthrough in CPI tonight
2025-09-11 11:12:03
The Australian dollar (AUD/USD) fluctuated around yesterday's closing price (0.6612) during the Asian session on Thursday (September 11), following gains in the previous session. With weaker-than-expected US Producer Price Index (PPI) data, markets anticipate the Federal Reserve will increase its easing efforts in September, potentially challenging the US dollar. The AUD/USD pair may resume its long-term upward trend. Market attention is turning to the US Consumer Price Index (CPI) for August, due later Thursday.
Australia's consumer inflation expectations rose to 4.7% in September from a five-month low of 3.9% in August. This increase reflects stronger domestic demand and has heightened market concerns about renewed inflationary pressures. Reserve Bank of Australia Governor Michelle Bullock emphasized that the private sector has begun to show "modest growth," which she believes is a positive sign for the economy.
The Australian dollar has found support as recent key economic data from Australia has weakened market expectations for further rate cuts from the Reserve Bank of Australia (RBA). Swap contracts currently indicate a near 86% probability that the RBA will maintain policy in September.
Although the Fed's interest rate cut expectations have been digested by the market, the US dollar remains strong and the Australian dollar's short-term gains are limited.
The US dollar index (DXY) is currently stable around 97.83. Although the market generally expects the Federal Reserve to start a rate cut cycle in September, the US dollar has shown resilience.
According to data from the CME FedWatch tool, the market is currently fully pricing in a 25 basis point rate cut at the Federal Reserve's September meeting, and the probability of a 50 basis point cut has risen to nearly 8%.
The U.S. Bureau of Labor Statistics (BLS) reported on Wednesday that the annual rate of PPI inflation in the United States fell to 2.6% in August from 3.3% in July, lower than the market expectation of 3.3%. In terms of monthly rate, the PPI fell by 0.1% in August, while the previous value was an increase of 0.7% (revised down from 0.9%).
“Based on the preliminary estimate of the Current Employment Statistics (CES) national benchmark revision, total nonfarm payrolls for March 2025 are likely to be revised down by 911,000, equivalent to a monthly decrease of about 76,000 jobs, indicating more slack in the labor market than previously estimated,” the Bureau of Labor Statistics stated in a press release. “The final benchmark revision will be released in February 2026 in conjunction with the January 2026 Employment Situation press release.”
Chicago Fed President Goolsbee said on Friday he was still unsure whether September would be the best time to cut interest rates after weak jobs data. He added that high inflation data remained a concern and that key Fed officials might not yet fully agree on a September rate cut.
China's CPI fell 0.4% year-on-year in August, compared to 0% in the previous month and the market expectation of a 0.2% decline. The monthly CPI inflation rate was 0%, compared to 0.4% in the previous month and the expected 0.1% increase. Given the close trade partnership between China and Australia, any changes in the Chinese economy could affect the Australian dollar.
Matthew Hassan, head of Australian macro forecasting at Westpac, noted that the consumer recovery since mid-2024 has been weak, with the consumer confidence index falling to 95.4 in September from 98.5 in August. Hassan said further policy easing may be needed, and he expects the Reserve Bank of Australia to cut interest rates by 25 basis points in November, with two additional rate cuts in 2026.
Australian dollar retreats from 10-month high but remains above 0.6600 support
Technical analysis on the daily chart shows that the Australian dollar remains within an ascending channel pattern, indicating that the bullish bias remains valid.
Furthermore, AUD/USD is trading above its 9-day exponential moving average (EMA) of 0.6571, suggesting that short-term price momentum remains strong.
On the upside, initial resistance is at 0.6624, the secondary high in the past three months. Key resistance is at 0.6635, the ten-month high set on September 10, followed by the upper track of the ascending channel near 0.6650. A break above this important resistance area will strengthen the bullish trend and push the Australian dollar against the US dollar to test the November 2024 high of 0.6687.
On the downside, the 9-day exponential moving average is at 0.6571 (where it intersects with the lower boundary of the ascending channel at 0.6560). A break below the lower boundary of the channel would weaken bullish momentum and push the pair towards the 50-day exponential moving average at 0.6517. Further declines would undermine the medium-term price trend and put pressure on the exchange rate to test the three-month low of 0.6414 set on August 21.
(AUD/USD daily chart, source: Yihuitong)
At 11:11 Beijing time, the Australian dollar was trading at 0.6611/12 against the US dollar.
Australia's consumer inflation expectations rose to 4.7% in September from a five-month low of 3.9% in August. This increase reflects stronger domestic demand and has heightened market concerns about renewed inflationary pressures. Reserve Bank of Australia Governor Michelle Bullock emphasized that the private sector has begun to show "modest growth," which she believes is a positive sign for the economy.
The Australian dollar has found support as recent key economic data from Australia has weakened market expectations for further rate cuts from the Reserve Bank of Australia (RBA). Swap contracts currently indicate a near 86% probability that the RBA will maintain policy in September.
Although the Fed's interest rate cut expectations have been digested by the market, the US dollar remains strong and the Australian dollar's short-term gains are limited.
The US dollar index (DXY) is currently stable around 97.83. Although the market generally expects the Federal Reserve to start a rate cut cycle in September, the US dollar has shown resilience.
According to data from the CME FedWatch tool, the market is currently fully pricing in a 25 basis point rate cut at the Federal Reserve's September meeting, and the probability of a 50 basis point cut has risen to nearly 8%.
The U.S. Bureau of Labor Statistics (BLS) reported on Wednesday that the annual rate of PPI inflation in the United States fell to 2.6% in August from 3.3% in July, lower than the market expectation of 3.3%. In terms of monthly rate, the PPI fell by 0.1% in August, while the previous value was an increase of 0.7% (revised down from 0.9%).
“Based on the preliminary estimate of the Current Employment Statistics (CES) national benchmark revision, total nonfarm payrolls for March 2025 are likely to be revised down by 911,000, equivalent to a monthly decrease of about 76,000 jobs, indicating more slack in the labor market than previously estimated,” the Bureau of Labor Statistics stated in a press release. “The final benchmark revision will be released in February 2026 in conjunction with the January 2026 Employment Situation press release.”
Chicago Fed President Goolsbee said on Friday he was still unsure whether September would be the best time to cut interest rates after weak jobs data. He added that high inflation data remained a concern and that key Fed officials might not yet fully agree on a September rate cut.
China's CPI fell 0.4% year-on-year in August, compared to 0% in the previous month and the market expectation of a 0.2% decline. The monthly CPI inflation rate was 0%, compared to 0.4% in the previous month and the expected 0.1% increase. Given the close trade partnership between China and Australia, any changes in the Chinese economy could affect the Australian dollar.
Matthew Hassan, head of Australian macro forecasting at Westpac, noted that the consumer recovery since mid-2024 has been weak, with the consumer confidence index falling to 95.4 in September from 98.5 in August. Hassan said further policy easing may be needed, and he expects the Reserve Bank of Australia to cut interest rates by 25 basis points in November, with two additional rate cuts in 2026.
Australian dollar retreats from 10-month high but remains above 0.6600 support
Technical analysis on the daily chart shows that the Australian dollar remains within an ascending channel pattern, indicating that the bullish bias remains valid.
Furthermore, AUD/USD is trading above its 9-day exponential moving average (EMA) of 0.6571, suggesting that short-term price momentum remains strong.
On the upside, initial resistance is at 0.6624, the secondary high in the past three months. Key resistance is at 0.6635, the ten-month high set on September 10, followed by the upper track of the ascending channel near 0.6650. A break above this important resistance area will strengthen the bullish trend and push the Australian dollar against the US dollar to test the November 2024 high of 0.6687.
On the downside, the 9-day exponential moving average is at 0.6571 (where it intersects with the lower boundary of the ascending channel at 0.6560). A break below the lower boundary of the channel would weaken bullish momentum and push the pair towards the 50-day exponential moving average at 0.6517. Further declines would undermine the medium-term price trend and put pressure on the exchange rate to test the three-month low of 0.6414 set on August 21.
(AUD/USD daily chart, source: Yihuitong)
At 11:11 Beijing time, the Australian dollar was trading at 0.6611/12 against the US dollar.
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