NextFin news, On Friday, October 10, 2025, Reserve Bank of Australia (RBA) Governor Michele Bullock delivered cautious remarks regarding the Australian economy, emphasizing that services inflation remains persistent and the labor market, while tight, is approaching balance. These comments provided support to the Australian Dollar (AUD) amid mixed economic signals.
Governor Bullock noted that second-quarter inflation was slightly above expectations but is trending in the right direction. She stressed the need for caution due to the volatility of monthly Consumer Price Index (CPI) data. The labor market remains somewhat tight, with the unemployment rate steady at 4.2%, supporting ongoing wage growth pressures.
Australia’s Consumer Inflation Expectations for October rose to 4.8%, the highest since June, reflecting concerns that inflation may exceed forecasts in the third quarter. This backdrop underpins the RBA’s cautious stance and the expectation that the central bank will maintain its Official Cash Rate (OCR) steady at 3.6%, as decided in September.
Despite these hawkish signals, the Australian Dollar lost some intraday gains against the US Dollar (USD), trading around 0.6570. The US Dollar Index (DXY) held losses after a four-day winning streak but remained broadly firm due to ongoing uncertainty from the US government shutdown and expectations of Federal Reserve (Fed) rate cuts later in 2025.
The Fed’s September meeting minutes indicated policymakers’ inclination toward further rate cuts this year, contrasting with the RBA’s more cautious outlook. This divergence in monetary policy outlooks has contributed to volatility in the AUD/USD currency pair.
Economic data from Australia showed mixed signals: private house approvals declined by 2.6% in August, and building permits fell by 6%, marking consecutive monthly decreases. Consumer confidence also dropped sharply in October, while retail sales showed modest growth, indicating a recovering but fragile demand environment.
Technical analysis suggests the AUD/USD pair is testing support near the 50-day Exponential Moving Average (EMA) at 0.6563. A break below this level could lead to further declines toward recent lows, while a rebound could push the pair toward resistance near the nine-day EMA at 0.6582 and potentially higher.
Overall, Governor Bullock’s remarks on persistent inflation and labor market conditions on Friday reinforced expectations that the RBA will keep interest rates steady through the end of 2025, supporting the Australian Dollar amid a complex global economic environment.
Sources: FXStreet, VT Markets, TradingView (October 10, 2025)
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