The Australian dollar is trading almost flat below its highest level in nearly two months, at 0.6654, hit on Tuesday. The pair is consolidating gains after rising more than 3% from November lows, as investors bide their time before the conclusion of the US Federal Reserve’s monetary policy meeting.
The market has practically ruled out a 25 basis point Fed rate cut later on Wednesday. This would be the third straight stance, and a tighter monetary policy stance is expected to follow, despite wide disagreement among policymakers.
Fed Powell and the “dot plot” will attract attention
Investors will focus on Chairman Powell’s next press conference and the bank’s interest rate forecast, or so-called “plot point,” for more information about the bank’s near-term monetary policy plans for 2026. Investors will be keen to compare market expectations of two or three more interest rate cuts next year with the bank’s future guidance.
On Tuesday, US President Donald Trump increased the pressure on the central bank in an interview with Politico, calling Powell “not a smart person” for refusing to cut interest rates quickly enough and asserting that support for “an immediate cut in interest rates” would be a condition for electing the next Fed chair.
In Australia, the Reserve Bank of Australia (RBA) left interest rates unchanged on Tuesday, as widely expected, and its governor Michelle Bullock warned of rising inflationary pressures, suggesting the next step will be to raise interest rates, perhaps in the second half of 2026.
The Australian dollar rose after the Reserve Bank of Australia’s decision, before trimming some losses amid weak inflation levels witnessed by China, Australia’s main trading partner. Annual inflation, as measured by the Consumer Price Index, accelerated in November, but monthly inflation contracted, and deflationary pressures on producer prices deepened, underscoring weak domestic consumption.
Economic indicator
Federal Reserve Monetary Policy Statement
After the interest rate decision made by the Federal Reserve Bank (Fed). Federal Open Market Committee (FOMC) issues its monetary policy statement. This statement may affect the volatility of the US Dollar (USD) and set a positive or negative trend in the short term. A hawkish view is considered bullish for the US dollar, while a pessimistic view is negative or bearish.
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Next release:
Wednesday 10 December 2025 at 19:00
repetition:
irregular
consensus:
–
former:
–
source:
Federal Reserve
Economic indicator
Federal interest rate decision
the Federal Reserve The Federal Reserve deliberates on monetary policy and decides on interest rates at eight pre-scheduled meetings annually. It has two mandates: keeping the inflation rate at 2%, and maintaining full employment. Its main tool for achieving this end is setting interest rates – at which banks lend and banks lend to each other. If it decides to raise interest rates, the US dollar (USD) tends to strengthen because it attracts more foreign capital inflows. If they lower interest rates, they tend to weaken the US dollar while draining capital to countries that offer higher returns. If interest rates are left unchanged, attention turns to the tone of the FOMC statement, and whether it is hawkish (expecting interest rates to rise in the future), or dovish (expecting interest rates to fall in the future).
Read more.
Next release:
Wednesday 10 December 2025 at 19:00
repetition:
irregular
consensus:
3.75%
former:
4%
source:
Federal Reserve
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