Australian Dollar drifts higher above 0.6950 on soft US jobs data

The AUD/USD pair edges higher to around 0.6955 during the earlyAsian session on Monday. Weaker-than-expected US jobs data weighs on the US Dollar (USD) against the Australian Dollar (AUD). Traders await the release of the US ISM Services Purchasing Managers Index (PMI) report later on Monday. 

Data released by the US Bureau of Labor Statistics on Friday showed that Nonfarm Payrolls rose by 29,000 jobs in September, followed by 133,000 in August (revised from 162,000). This figure came in below the market consensus of 90,000. 

Expectations for a Federal Reserve (Fed) interest rate hike later this month fell after softer US jobs data. Markets are now pricing in nearly a 22.1% probability of a Fed rate hike in October and an 87.2% chance of an increase in December, according to the CME FedWatch Tool. 

On the Aussie front, the odds of the Reserve Bank of Australia (RBA) raising interest rates in November have fallen sharply after the latest Consumer Price Index (CPI) came in line with expectations. Money markets are now betting the Australian central bank will likely leave rates unchanged at its November policy meeting. The probability of a rate hike fell to around 20%, data from LSEG showed. 

RBA seen on hold as softer inflation and housing strain cap Aussie upside

Analysts at Commerzbank argue that the latest data underscore why “1.5 additional rate hikes by the RBA – as the market was still expecting yesterday – are likely to be too much.” One day after the Reserve Bank of Australia’s monetary policy meeting, they note that the CPI figures released today “also show” the case for caution, even though “there’s no question that inflation is still too high, and it will take a while before it returns to the middle of the target range.”

Commerzbank stresses that “interest rate hikes always take effect with a certain time lag,” and points in particular to the real estate sector, “where building permits fell again in August by 6.1% compared to the previous month and prices in the largest cities continue to decline.” Against this backdrop, the bank judges that “the RBA would likely be well advised to wait and see how things develop in the coming months.” In turn, they conclude that “the AUD is unlikely to receive any further tailwind.”

Logan’s hawkish tilt lifts Fed sentiment and supports the Dollar

Fed’s Logan delivered a notably more hawkish message, with the FXS Speechtracker score at 9.2/10, well above the 8.1/10 historical average, underscoring a stronger tightening bias relative to the established baseline. The emphasis that higher yields may reflect increased term premiums, potentially reducing the need for further aggressive tightening, sits alongside explicit calls for at least 50 bps more in rate hikes and several additional moves, reinforcing a view that policy is not yet restrictive enough and that inflation will not reach 2% without higher rates, a mix that is broadly supportive for the Dollar. Overall, the speech signals confidence in economic expansion and a balanced labor market, but with a clear priority on reviving price stability through additional tightening.

The FXS Fed Sentiment Index rose by 1.68 points to 136.59, confirming a solid move deeper into hawkish territory and aligning with the elevated FXS Speechtracker reading. With the index far above the neutral 100 mark, the data point reinforces expectations for further policy rate increases and keeps the Dollar underpinned against the Euro and Yen.

Technical Analysis: AUD/USD keeps a bearish vibe below the 100-day

In the daily chart, AUD/USD keeps a bearish near-term tone as spot holds beneath the 100-day simple moving average (SMA) and the Bollinger middle band SMA. Price is now leaning toward the lower half of the recent volatility envelope, while the Relative Strength Index (14) at 31.5 hovers just above oversold territory, hinting that downside momentum is still dominant but increasingly stretched.

On the topside, initial resistance is seen at the 100-day SMA at 0.7055, followed by the Bollinger middle band around 0.7070; a daily close above these levels would be needed to ease immediate selling pressure before the next barrier at the Bollinger upper band near 0.7250. On the downside, the Bollinger lower band at 0.6895 offers the first notable support, where failure to hold could open the way toward fresh lows in the broader bearish sequence.