The Australian Dollar (AUD) strengthened to near 0.6945 against the US Dollar (USD) during early European trading on Friday. This move came after Federal Reserve Chair Kevin Warsh's speech at an International Monetary Fund (IMF) event, which prompted some selling of the USD. Warsh emphasized that he would assess the situation at the October and December policy meetings, stating, "We removed a dose of accommodation about a month ago. I don’t prejudge meetings."
Meanwhile, the probability of a Reserve Bank of Australia (RBA) interest rate rise in November dropped to below 20%, down from around 35% earlier. This shift followed the latest Australian jobs data, which showed unemployment rising to 4.7% and a loss of 39,300 jobs in September. Analysts at Rabobank noted the contraction in jobs and highlighted the upcoming RBA annual report for potential policy signals.
Warsh’s speech scored 5.6 out of 10 on the FXS Speechtracker, slightly below the baseline, indicating a cautious tone. He acknowledged being "over-scarred from the global financial crisis" but pointed to structural growth and investment surges. The FXS Fed Sentiment Index remained unchanged at 127.51, maintaining a hawkish policy stance.
Technically, the AUD/USD pair remains bearish below the 100-day simple moving average. Key resistance levels include the 20-period Bollinger lower band at 0.6885 and the middle band at 0.6990. The Relative Strength Index (14) hovers around 39, suggesting continued downside pressure.