On Tuesday, November 4, the Reserve Bank of Australia (RBA) will conclude its next-to-last meeting of the year.
There is no doubt that the central bank will take a wait-and-see approach; this is the basic and most anticipated scenario. AUD/USD traders already priced in this scenario last week, when key third-quarter Australian CPI data was published. All components of the report came in positive, reflecting an acceleration in inflation. Additionally, the preceding statements from the Reserve Bank of Australia's head were also hawkish—at least in the context of the likely outcomes of the November meeting. Therefore, the formal results of the meeting are predetermined: the central bank will keep all monetary policy parameters unchanged.
However, the November meeting is by no means a "passive" one. The main intrigue lies in the prospects for further rate cuts. For instance, UOB Group, ANZ, and Westpac believe that the next step towards easing monetary policy by the RBA could only occur in February 2026, when fourth-quarter inflation data for this year will be published. The overwhelming majority of experts agree that the RBA will adopt a wait-and-see approach this year. Therefore, if the RBA even theoretically considers a rate cut in December, the Aussie will come under significant pressure, given the overall hawkish sentiment in the market. While such a scenario is unlikely, it cannot be entirely ruled out considering the current state of the Australian labor market.
It is worth noting that according to the latest data, the unemployment rate unexpectedly rose to 4.5% in September, setting a multi-year anti-record (the highest level since November 2021). Despite forecasts of "stagnation," unemployment has risen for the second consecutive month. The number of employed rose by 14,000, while the forecast was for a rise of 20,000 (with the August employment data being revised downward to -12,000). The participation rate increased to 67.0%, while most analysts expected to see this indicator at the August level of 68.8%. Full employment rose by 8,700 after a sharp drop (of 40,000) in the previous month.
Such results have shifted market expectations towards a more dovish stance from the RBA. Commenting on this release, RBA Governor Michelle Bullock stated that the sharp rise in the unemployment rate "was a surprise," acknowledging that labor supply "is not growing as fast as before." At the same time, she noted that there is still some tension in the labor market.
A natural question arises: will the "Australian Nonfarms" soften the RBA's position? In my opinion, no. This is not only due to the acceleration of inflation on the other side of the scale.
It is noteworthy that alongside the rising unemployment, the participation rate has also increased. Such seemingly contradictory signals indicate that more people have entered the labor market, meaning there are more job seekers. Conversely, employers have created fewer jobs than there are new candidates.
This situation allows the RBA to maintain a wait-and-see approach: there is no need to "put out the fire" in the labor market, as there is no actual "fire" to address. At least, not at this moment.
In contrast, inflation poses genuine concern. In quarterly terms, the overall consumer price index rose to 1.3%—the highest figure since the beginning of 2023 (the forecast was 1.1%). Year-on-year, the overall CPI increased to 3.2%—the highest level since the second quarter of last year. The averaged CPI (Trimmed Mean CPI), which serves as the most accurate indicator of sustained price trends (as it excludes the most volatile components), was 3.0% in the third quarter (after a rise to 2.7%), reaching the upper boundary of the target range (the highest level since the fourth quarter of 2024).
Commenting on this release, Deputy Governor Sarah Hunter mentioned upside risks to inflation, suggesting the central bank will keep all monetary policy parameters unchanged this month. RBA Governor Michelle Bullock, in turn, noted that the interest rate "may not decline as much as with other central banks," adding that the central bank is "in a good position regarding employment and inflation."
All of this suggests that the RBA will most likely not only maintain all monetary policy parameters unchanged but also articulate a "moderately hawkish" rhetoric. This would clearly signal that the RBA will make a similar decision in December. Such a scenario is likely already priced in, so the rise in the AUD/USD pair may be short-lived. Price spikes should be utilized as opportunities to open short positions, considering the overall strengthening of the US dollar.
From a technical standpoint, the pair is located on the middle line of the Bollinger Bands indicator on both the daily and weekly charts and is positioned between the Tenkan-sen and Kijun-sen lines. On the D1 chart, the pair is below the Kumo cloud, while on the W1 chart, it is above the Kumo cloud. This indicates an ongoing uncertainty. The nearest support level (which is also a target for the southward movement) corresponds to the mark of 0.6500 (the lower boundary of the Kumo cloud coinciding with the lower line of the Bollinger Bands on the H4 timeframe).
