The AUD/USD pair is entering a bullish consolidation phase during the Asian session on Friday and is oscillating in a range around the round figure of 0.6600, just below the highest level in almost two months, which it touched the previous day. Meanwhile, the fundamental backdrop suggests that the path of least resistance for spot prices remains to the upside, although bulls would prefer to wait for the crucial US inflation report before taking positions to extend the two-week-old uptrend.
The US Personal Consumption Expenditure Price Index for October will be published later today. The core measure is seen as the US Federal Reserve’s (Fed) preferred measure of inflation and will be looked to for signals on the path of future interest rate cuts. This, in turn, will play a major role in influencing the US Dollar (USD) price dynamics in the near term and provide some beneficial momentum to the AUD/USD pair. Meanwhile, divergent policy outlooks for the Fed and the Reserve Bank of Australia (RBA) should continue to act as a tailwind for the currency pair.
Recent US macro data pointed to a gradual slowdown in the economy and signs of a weak labor market. Additionally, comments from several Fed officials indicate that another rate cut in December is a certainty. In fact, traders now expect a roughly 90% probability that the US central bank will cut borrowing costs by 25 basis points next week. This has been a major factor behind the US dollar’s underperformance and should prevent any attempt to recover from its lowest level since late October, Thursday notwithstanding.
Meanwhile, Reserve Bank of Australia Governor Michelle Bullock admitted to a parliamentary committee earlier this week that inflation was not yet sustainably within the central bank’s annual target range of 2% to 3%. Bullock also warned that the central bank is taking the latest inflation numbers very seriously, and if price pressure turns out to be permanent, that will have implications for the future course of monetary policy. This in turn has increased speculation that the Reserve Bank of Australia may raise interest rates next year, supporting the Australian dollar and supporting the AUD/USD pair.
Economic indicator
Core Personal Consumption Expenditures – Price Index (annual)
Core personal consumption expenditures (PCE), issued by US Bureau of Economic Analysis On a monthly basis, it measures changes in the prices of goods and services purchased by consumers in the United States. The Personal Consumption Expenditures Price Index is also the Fed’s preferred measure of inflation. The annual reading compares commodity prices in the reference month with the same month of the previous year. The core reading excludes the more volatile so-called food and energy components to give a more accurate measure of price pressures.
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Next release:
Friday 05 December 2025 at 13:30
repetition:
monthly
consensus:
2.9%
former:
2.9%
source:
US Bureau of Economic Analysis
Following the publication of the GDP report, the US Bureau of Economic Analysis releases personal consumption expenditures (PCE) price index data along with monthly changes in personal spending and personal income. Policymakers at the Federal Open Market Committee use the core annual personal consumption expenditures price index, which excludes volatile food and energy prices, as their main measure of inflation. A stronger than expected reading may help the US dollar outperform its rivals, as this may indicate a possible hawkish shift in the Fed’s future guidance and vice versa.
