Fundamental Overview

USD

The US dollar weakened broadly on Friday after a softer-than-expected Non-Farm Payrolls (NFP) report, which showed negative headline payroll growth and average hourly earnings falling well short of forecasts.

The data prompted a dovish repricing of interest rate expectations, with the probability of a September rate hike dropping to 38%, down from 54% prior to the release. Market pricing has since normalised, with the implied probability of a September hike climbing back to 48%. This stands against the backdrop of a Fed funds rate already at a 23-year high of 5.25–5.50%, where it has held since July 2023.

The whipsaw in expectations can be attributed to a significant loss of government jobs in the report, which made the overall figure appear softer than the underlying data suggested. The unemployment rate told a different story, declining further to 4.1%. Taken together, the labour market remains on a healthier trajectory than it has been over the past three years.

The next major catalyst is Wednesday's US CPI report. The inflation data will be pivotal for the September FOMC decision and the upcoming Jackson Hole Symposium, an annual gathering where Fed chairs have historically used their keynote addresses to signal shifts in the policy outlook. A hotter-than-expected reading would likely fuel a US dollar rally as traders increase their rate hike bets. Conversely, a softer report should further diminish the prospect of additional Fed tightening and place added pressure on the greenback.

AUD

On the Australian dollar side, the Reserve Bank of Australia (RBA) is widely expected to hold the Cash Rate steady at 4.35% at tomorrow's meeting, following a run of subdued economic data. The labour market has loosened more quickly than anticipated, and Q2 CPI came in below the RBA's own forecasts. This positions the RBA as one of the few major central banks still clinging to a hawkish bias, even as the European Central Bank and Bank of Canada have already begun cutting rates.

At this meeting, the RBA will also release its updated Statement on Monetary Policy (SMP), in which the unemployment outlook is expected to be revised higher while the inflation path is revised lower.

Market attention will likely centre on the final paragraph of the Board's policy statement. In June, that paragraph read: "Monetary policy is well placed to respond to developments and the Board is focused on its mandate to deliver price stability and full employment. It will do what it considers necessary to achieve that outcome, including increasing the cash rate target further if required. Today's policy decision was unanimous."

The consensus expects the Board to hold rates unchanged while retaining its hawkish bias. Any removal of the phrase "including increasing the cash rate target further if required" would be interpreted as a dovish surprise. Focus will then shift to the post-meeting press conference for potential policy signals from RBA Governor Michele Bullock.

AUD/USD Technical Analysis

Daily Timeframe

On the daily chart, AUD/USD is trading near a key resistance zone around the 0.7085 level. Sellers are expected to step in at this level, with defined risk positioned above the resistance, targeting a pullback toward 0.6835. Buyers, conversely, will be looking for a decisive breakout above this zone to extend bullish positions toward the 0.72 handle.

4-Hour Timeframe

On the 4-hour chart, price action approaching the resistance appears to be forming a rising wedge — generally considered a reversal pattern, with the base of the wedge serving as the first downside target. Sellers will be watching for a break below the lower trendline to add to bearish positions and target new lows. Buyers, meanwhile, will continue to lean on the trendline with defined risk below it, aiming to push toward fresh highs.

1-Hour Timeframe

On the 1-hour chart, the setup mirrors the higher timeframes. Sellers will seek opportunities near the resistance zone and on a break of the lower trendline, while buyers will rely on the trendline for support, either targeting new highs or awaiting a confirmed breakout above resistance. The red lines on the chart denote the average daily range for the session.

Upcoming Catalysts

• Tomorrow: RBA rate decision
• Wednesday: US CPI report
• Thursday: US PPI data and the latest weekly Jobless Claims figures
• Friday: US Retail Sales and the University of Michigan Consumer Sentiment report