The Australian Dollar (AUD) trimmed early gains against the US Dollar (USD) on Wednesday as investors turned cautious ahead of the Federal Reserve’s interest rate decision later today. The AUD/USD pair is trading around 0.6600, still up 0.15% on the day after earlier reaching higher levels following strong domestic inflation data.
Hot Australian CPI Data Boosts the Aussie
The Aussie Dollar jumped early in the session after Australia’s Q3 Consumer Price Index (CPI) came in hotter than expected.
- Quarterly CPI: +1.3% (vs. +1.1% forecast, +0.7% prior)
- Annual CPI: +3.2% (vs. +3.0% forecast, +2.1% prior)
- Monthly CPI: Accelerated to 3.5%
The stronger inflation print has reduced expectations of further rate cuts by the Reserve Bank of Australia (RBA) this year, offering short-term support to the local currency.
Currency Heat Map: AUD Leads Gains
| Base/Quote | USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF |
|---|---|---|---|---|---|---|---|---|
| AUD | 0.25% | 0.31% | 0.61% | 0.32% | 0.22% | — | 0.21% | 0.58% |
The Australian Dollar stands out as the strongest major currency, particularly against the British Pound, reflecting broad-based strength following the inflation data.
Global Focus: Fed Decision and Trump–Xi Meeting
Globally, investors remain focused on two key events:
- The Federal Reserve’s monetary policy decision at 18:00 GMT, where markets widely expect a 25-basis-point rate cut to a 3.75%–4.00% range. Traders will closely watch the Fed’s policy statement and Chair Jerome Powell’s comments for clues on the future rate path.
- The anticipated meeting between U.S. President Donald Trump and China’s President Xi Jinping, which could influence global risk sentiment and commodity-linked currencies such as the Aussie, given Australia’s heavy trade exposure to China.
The U.S. Dollar Index (DXY) also trades firmer ahead of the Fed, with investors seeking clarity on the outlook for growth and employment amid limited data flow due to an ongoing U.S. federal shutdown.
Fed Decision Preview
The Federal Reserve is expected to cut rates by 25 bps, lowering the Federal Funds Rate to a 3.75%–4.00% range. The Fed’s dual mandate focuses on price stability (2% inflation target) and maximum employment.
A rate hike typically strengthens the U.S. Dollar, while a rate cut tends to weaken it as yields fall. If the Fed leaves rates unchanged, market reaction will depend heavily on whether the FOMC statement is hawkish (implying more hikes) or dovish (signaling further cuts).
- Next release: Wednesday, October 29, 2025 – 18:00 GMT
- Consensus: 4.00%
- Previous: 4.25%
- Source: Federal Reserve
