Three-week winning streak comes to an end<\/p>\n
AUD\/USD<\/a>\u00a0\u00a0finished lower last week at 0.6611 (-0.63%), snapping its three-week winning streak. The pullback<\/a> coincided with a rebound in the US Dollar Index (DXY)<\/a>, as traders largely looked through last week\u2019s key US data releases.<\/p>\n Mixed signals from US economic data<\/p>\n The cooler US November consumer price index (CPI)<\/a> report was viewed as unreliable due to measurement issues stemming from the prolonged government shutdown. Meanwhile, the November non-farm payrolls (NFP)<\/a> report offered mixed signals.<\/p>\n On the positive side, private payrolls proved relatively resilient, rising by 69,000 in November. Offsetting this gain, the unemployment rate ticked up to 4.6% \u2013 the highest level since September 2021.<\/p>\n On balance, last week\u2019s US data reinforced expectations for two 25 basis point (bp)<\/a> Federal Reserve (Fed)<\/a> rate cuts in 2026, without advancing the case for a more aggressive Fed easing cycle next year.<\/p>\n Risk aversion also played a role in Australian dollar’s (AUD)<\/a>\u00a0decline, as US equities<\/a> spent much of the week under pressure amid concerns over elevated valuations and high debt levels in the artificial intelligence (AI) sector. Finally, last week\u2019s decline in AUD\/USD reflected profit taking following its sharp 4.10% rally<\/a> from 21 November low of 0.6419 to 10 December high of 0.6685.<\/p>\n Key events ahead<\/p>\n Looking ahead, Tuesday\u2019s Reserve Bank of Australia (RBA) December meeting minutes and Wednesday\u2019s third-quarter (Q3) gross domestic product (GDP)<\/a> print will be pivotal, alongside month- and quarter-end rebalancing flows, in determining whether AUD\/USD can retest recent highs.<\/p>\n RBA meeting minutes<\/p>\n Date:\u00a0Tuesday, 23 December at 11.30am AEDT<\/p>\n At its December Board meeting, RBA held the cash rate unchanged at 3.60%, as widely anticipated, marking the third consecutive hold.<\/p>\n The decision came with a hawkish<\/a> tone in the accompanying statement. Key observations included inflation<\/a> appearing more broad-based, strengthening private sector growth, a recovering housing market, a still-tight labour market, capacity utilisation remaining above long-run averages, elevated unit labour costs, and the potential for further capacity pressures if private demand continues to accelerate.<\/p>\n RBA Governor Michele Bullock\u2019s subsequent press conference reinforced this hawkishness, noting that a rate cut was not considered, while the Board did discuss scenarios that could warrant a hike. She emphasised RBA\u2019s tightening bias, stating that \u2018if it looks like inflation is not coming back to the band then the Board will have to take action, and it will.\u2019<\/p>\n The upcoming minutes will be closely scrutinised for deeper insights into potential triggers and timing around a first rate hike or a shift back toward a neutral policy stance.<\/p>\n