AUD/USD Rallies as Fed Cut Bets Outweigh Soft Aussie Jobs

A softer Australian labour market has complicated the RBA's policy path, yet AUD/USD still posted gains during the week of August 17-21. The reason lies across the Pacific: traders largely dismissed hawkish FOMC minutes and instead priced in upcoming Federal Reserve rate cuts.

This divergence between domestic caution and external dollar weakness has been the defining driver for the pair. Even with the RBA's own outlook clouded by weakening employment, the broader repricing of Fed policy expectations has been strong enough to lift AUD against the greenback.

With NZD also posting comparable gains, the move looks less about Australian strength and more about a synchronized commodity-bloc rally against a Fed that markets believe is turning dovish.