AUD/USD Moves Higher on RBA Inflation Warning and Fed Dovish Tone

The Australian dollar has strengthened against the U.S. dollar, trading near 0.6520 on 15 October 2025. The rise follows a statement from Reserve Bank of Australia (RBA) assistant governor Sarah Hunter, who cautioned that inflationary pressures could persist. The move coincides with U.S. Federal Reserve signals of dovish policy, which have weakened the U.S. dollar across markets.

Market Reaction to RBA Commentary

  • RBA Statement: Sarah Hunter warned that upside inflation risks remain, prompting traders to lift the AUD.
  • Immediate Impact: The AUD/USD pair advanced by 0.40 % to about 0.6510 early in the day, and by 0.50 % during the European session, reaching 0.6520.
  • Analysis: The RBA’s caution on inflation suggests that the central bank may keep interest rates stable or raise them if necessary, supporting a stronger Australian dollar relative to the U.S. dollar.

Fed Policy and U.S. Dollar Weakness

  • Fed Dovish Tone: Fed Chair Jerome Powell’s speech on 14 October highlighted a dovish stance, indicating potential future rate cuts.
  • Market Response: The dovish signal has been the principal driver of U.S. dollar weakness, reflected in a 0.4–0.5 % decline in the AUD/USD pair.
  • Implications: Continued dovishness may keep the U.S. dollar subdued, allowing the AUD to maintain its recent gains.

Trade Tensions and Broader Context

  • U.S.–China Trade: Persistent trade tensions between the United States and China remain a backdrop. The AUD is closely linked to U.S.-China trade dynamics, and any escalation could affect currency flows.
  • Job Data: Australian September employment figures were released overnight, with consensus expecting a rise of 20 000 jobs after August’s decline. This positive labour market data supports the AUD’s recent rally.
  • Regional Sentiment: Positive political developments in France and optimism about U.S. interest‑rate cuts have bolstered risk‑on sentiment in Asian markets, indirectly supporting the AUD.

Technical Outlook

  • Current Level: 0.65116 (close on 13 October 2025).
  • Recent High: 0.67232 (52‑week high reached on 20 October 2024).
  • Recent Low: 0.592308 (52‑week low reached on 8 April 2025).
  • Short‑Term Target: Analysts at UOB Group see potential for the AUD to test 0.6440 as the dollar remains weak.
  • Momentum: The pair is trading above its 100‑day simple moving average, indicating bullish momentum amid a weaker dollar backdrop.

Conclusion

The AUD/USD pair has gained on a combination of RBA inflation warnings, Fed dovishness, and supportive Australian labour market data. While trade tensions continue to weigh on broader market sentiment, the current technical and fundamental environment suggests that the Australian dollar may maintain its recent gains against the U.S. dollar in the near term.