AUD/USD near 10‑month low as Fed hawkish outlook strengthens dollar
ITF Team3 min read
AUD/USD slipped to around 0.6840 on 11/12/2026, its lowest in ten months, as Fed rate‑hike odds rise and the RBA stays on hold.
Key takeaways
- AUD/USD traded around 0.6840 on 11/12/2026, its lowest level in ten months.
- CME FedWatch Tool showed an 87% probability of a December 2026 rate hike and a 13% chance of a 50‑bp hike.
- Australia’s consumer inflation expectations held at 5.3% in November, the highest since June 2026.
- Markets price about 28 bps of RBA cuts in 2027.
The Australian dollar fell to roughly 0.6840 against the U.S. dollar on 11/12/2026, marking a near ten‑month low. The move came as the U.S. dollar gained fresh support from an increasingly hawkish Federal Reserve outlook, pushing the pair lower for the third straight Asian session.
Fed‑driven dollar strength fuels AUD decline
Hotter‑than‑expected U.S. consumer‑price data lifted inflation expectations, prompting traders to price in a higher likelihood of a December rate hike. Fed Governor Christopher Waller signalled readiness to back a 25‑bp increase, or even a 50‑bp move if inflation worsens. The CME FedWatch Tool now reflects an 87 % probability of a December hike and a 13 % chance of a larger 50‑bp step, reinforcing the dollar’s upward bias.
A stronger dollar typically depresses commodity‑linked currencies such as the Aussie, because higher U.S. yields make non‑yielding assets like gold and Australian bonds less attractive. The AUD’s slide to 0.6840 therefore mirrors the broader risk‑off tone that has taken hold across Asian markets.
RBA stance and domestic inflation pressures
Despite Australia’s consumer inflation expectations staying at 5.3 % in November – the highest since June 2026 – the Reserve Bank of Australia has left policy unchanged, suggesting the tightening cycle may be over. September headline inflation surged to a six‑month high of 4.3 %, well above the RBA’s 2‑3 % target, yet the central bank appears content to hold rates for the foreseeable future.
Market pricing from Prime Terminal indicates about 28 bps of RBA cuts are expected in 2027, reflecting a belief that the bank will eventually ease as price pressures recede. In the short term, however, the RBA’s on‑hold posture removes a key source of support for the AUD, leaving it vulnerable to external headwinds.
Read also: UK GDP Q3 growth expected at 0.7% and its impact on GBP/USD
External drivers: bond yields, China and iron‑ore demand
Societe Generale strategists warned that rising global bond yields are beginning to bite interest‑sensitive sectors, especially Australia’s leveraged housing market. Higher funding costs could weigh on consumer spending and, by extension, on the broader economy.
Australia’s export profile adds another layer of sensitivity. Iron‑ore, the country’s top export, is heavily tied to Chinese demand. Any slowdown in China – the largest trading partner – would depress iron‑ore prices, erode the trade surplus and further weaken the AUD. Conversely, a rebound in Chinese growth could lift the Aussie, but that narrative is currently muted by the prevailing risk‑off mood.
Technical picture and near‑term outlook
The pair has been testing the 0.6850 resistance level, which has acted as a ceiling for the past two weeks. A break below 0.6840 could open the door to the 0.6800‑0.6780 zone, where the AUD found support earlier in the year. Conversely, a rally back above 0.6850 would require a clear shift in risk sentiment or a surprise dovish turn from the Fed.
Traders should watch upcoming data releases: U.S. non‑farm payrolls on 11/14/2026, which could further clarify the Fed’s stance, and Australia’s Q4 GDP figures due on 11/21/2026. Both events have the potential to move the AUD/USD pair sharply.
- 11/12/2026 – AUD/USD around 0.6840 (near 10‑month low)
- 87 % probability of a December 2026 Fed hike (CME FedWatch)
- 5.3 % Australian consumer inflation expectations in November
- 28 bps of RBA cuts priced for 2027 (Prime Terminal)
Frequently asked questions
Why did the Australian dollar fall to near ten‑month lows on 11/12/2026?
The drop to about 0.6840 was driven by a stronger U.S. dollar after hotter‑than‑expected U.S. CPI data raised expectations of a December Fed rate hike, while the Reserve Bank of Australia kept rates unchanged despite high domestic inflation expectations.
How does the RBA’s policy stance affect the AUD?
The RBA sets the benchmark interest rate that influences all Australian borrowing costs. When the RBA holds rates while other major central banks tighten, the AUD loses relative yield appeal, pushing the currency lower, as seen in the recent slide toward 0.6840.
Official data sources
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This article is compiled from international market news for information only. It is not investment advice.