Australian Dollar continues to hold its strength after the release of Westpac Consumer Confidence data

Australian Dollar Advances Despite Weak Consumer Sentiment

On Tuesday, the Australian Dollar gained ground against the US Dollar, even as the Westpac Consumer Confidence Index dropped by 1.7% month-over-month in January, reaching a three-month low of 92.9. This decline extended the sharp 9.0% fall seen in December, reflecting changing expectations around interest rates.

In December, ANZ Job Advertisements slipped by 0.5%, following a revised 1.5% decrease the previous month. Meanwhile, household spending edged up by 1.0% in November 2025, a slower pace compared to the revised 1.4% increase in October, as consumers remained cautious in the face of high interest rates and ongoing inflationary pressures.

Australia’s November Consumer Price Index (CPI) presented a mixed picture, leaving the Reserve Bank of Australia’s (RBA) policy outlook uncertain. RBA Deputy Governor Andrew Hauser noted that the inflation figures were largely in line with expectations and indicated that rate cuts are unlikely in the near future. Investors now look ahead to the upcoming quarterly CPI report for clearer signals on the RBA’s next steps.

US Dollar Faces Headwinds Amid Fed Policy Uncertainty

• The US Dollar Index (DXY), which tracks the US Dollar against a basket of six major currencies, hovered near 98.90 at the time of reporting. Market participants are awaiting the December Consumer Price Index (CPI) release, which could provide insight into the Federal Reserve’s future policy direction.
• The US Dollar has come under pressure as expectations for a dovish Federal Reserve grow. Slower-than-anticipated job growth in December suggests the Fed may keep interest rates unchanged at its upcoming meeting.
• Nonfarm Payrolls increased by 50,000 in December, falling short of both the revised November figure of 56,000 and market forecasts of 60,000. However, the unemployment rate dipped to 4.4% from 4.6% in November, and average hourly earnings rose to 3.8% year-over-year, up from 3.6% previously.
• Richmond Fed President Tom Barkin welcomed the lower unemployment rate and described job growth as steady but modest. He also remarked that hiring outside of healthcare and AI sectors remains limited, making it uncertain whether the labor market will see more hiring or layoffs ahead.
• US Treasury Secretary Scott Bessent, speaking to CNBC, advocated for continued rate cuts by the Federal Reserve, arguing that lower rates are essential for stronger economic growth and urging the Fed not to delay further action.
• The US Department of Labor reported that initial jobless claims rose slightly to 208,000 for the week ending January 3, just below expectations of 210,000 but above the previous week’s revised 200,000. Continuing claims climbed to 1.914 million from 1.858 million, indicating a gradual increase in the number of people receiving unemployment benefits.
• The Institute for Supply Management (ISM) announced that the US Services PMI rose to 54.4 in December, up from 52.6 in November and surpassing the expected 52.3.
• According to ADP, private sector employment grew by 41,000 jobs in December, following a revised decline of 29,000 in November, though this was slightly below the anticipated 47,000. The JOLTS report showed 7.146 million job openings in November, down from October’s revised 7.449 million and below the forecast of 7.6 million.
• China’s Consumer Price Index (CPI) increased by 0.8% year-over-year in December, up from 0.7% in November but missing the 0.9% projection. On a monthly basis, CPI rose by 0.2%, reversing the previous month’s 0.1% decline. Meanwhile, the Producer Price Index (PPI) fell by 1.9% year-over-year, an improvement from the previous 2.2% drop and slightly better than the expected -2.0%.
• Recent data from the Australian Bureau of Statistics showed that Australia’s trade surplus narrowed to 2,936 million in November, down from a revised 4,353 million in the prior month. Exports decreased by 2.9% month-over-month, following a revised 2.8% increase in October, while imports edged up by 0.2%, compared to a 2.4% rise in the previous month.

AUD/USD Holds Above 0.6700 and Nine-Day EMA

The AUD/USD pair is trading near 0.6710 as of Tuesday. Technical analysis on the daily chart reveals a rebound toward an upward channel, indicating renewed bullish momentum. The 14-day Relative Strength Index (RSI) stands at 60.55, remaining above the neutral level and supporting further gains.

Should the upward trend continue, AUD/USD may aim for 0.6766, marking its highest point since October 2024. A further rally could see the pair challenge the top of the ascending channel around 0.6860.

Immediate support is found at the nine-day Exponential Moving Average (EMA) of 0.6705, with the next level at the 50-day EMA of 0.6634. A break below these levels could expose the pair to losses toward 0.6414, the lowest since June 2025.

AUD/USD: Daily Chart