Weekly FX Update
21 September 2026
After the Fed hike, Australia’s jobs report takes centre stage
The Federal Reserve delivered the expected 25bp rate increase last week, taking the federal-funds target to 3.75%–4.00%, but the important message was what comes next. All 12 voting FOMC members backed the increase and 16 of 18 policymakers expect at least one further rate rise this year.
That hawkish message pushed the U.S. 10-year Treasury yield above 5% during Friday trading and has strengthened the USD backdrop.
The AUD nevertheless remains reasonably resilient. The latest available AUD/USD quote is approximately 0.7126, with a recent trading range of roughly 0.7104–0.7137. That is below the 0.72+ levels seen earlier this month, but still considerably stronger than levels prevailing through much of the year.
This week the focus shifts home. Australian August employment is released Thursday at 11:30am, and it has the potential to materially change expectations for the next RBA decision.
What Is Driving the Australian Dollar?
- RBA expectations have become much more hawkish. The next monetary-policy decision is only eight days away, on Tuesday, 29 September at 2:30pm Sydney time. Before then, Governor Bullock speaks at CEDA on Tuesday afternoon, giving markets another opportunity to assess how concerned the RBA has become about inflation.
That creates an interesting support mechanism for the AUD: every stronger inflation signal now potentially increases the probability of an Australian rate rise.
- The Fed has moved first. The Fed’s move to 3.75%–4.00% and indication of further tightening has strengthened the USD and lifted global yields. Reuters reports the US 10-year Treasury yield moved above 5% last week as markets absorbed higher oil, inflation and government borrowing risks.
That helps explain why AUD/USD has not rallied despite increasingly hawkish RBA expectations.
- Oil remains the biggest macro wildcard. Brent eased below US$105 on Friday after China urged Iran to restrain Houthi attacks on Saudi infrastructure, but the Strait of Hormuz remains heavily disrupted and Saudi pipeline repairs remain uncertain.
This matters to CurrenC clients because the effect is broader than petrol prices. Sustained US$100+ oil can feed into transport, production and consumer prices, making central banks more reluctant to stop tightening.
- China has chosen patience rather than stimulus. People’s Bank of China left its benchmark lending rates unchanged for a 16th consecutive month: the one-year LPR remains 3.00% and the five-year rate 3.50%.
For the AUD, that is broadly neutral. Beijing is not withdrawing support, but neither is it delivering the large new stimulus package that commodity currencies would normally welcome.
- Australia finally gets the delayed labour report. The ABS will release August Labour Force data at 11:30am Thursday. This is easily Australia’s most important scheduled data release this week.
Market Snapshot
FX levels are the latest official RBA reference rates, published for Friday 18 September. Commodity prices and policy rates are the latest available market references entering the week.
| Currency pair | Latest reference | Current tone |
| AUD/USD | 0.7126 | Softer; broad USD strength post-Fed hike |
| AUD/EUR | 0.6208 | Slightly firmer on the week |
| AUD/GBP | 0.5333 | Firmer, despite BOE’s hawkish-leaning split |
| AUD/NZD | 1.2445 | Firmer |
| AUD/JPY | 112.02 | Firmer, as dovish BOJ guidance capped yen gains |
| AUD/CNY | 4.7732 | Slightly softer |
| AUD Trade-Weighted Index | 66.0 | Little changed on the week |
| Market driver | Latest reference | Current context |
| Brent crude | ~US$104/bbl | Down ~1.2% on the week as pipeline repairs progress |
| WTI crude | ~US$99/bbl | Tracking Brent lower |
| Gold | ~US$4,380/oz | Up on the week despite a firmer USD and higher yields |
| Copper | ~US$6.62/lb (\~US$14,600/t) | Extending gains for a fourth straight session |
| RBA cash rate | 4.35% | Held; next decision Tuesday 29 September |
| Fed funds target | 3.75%–4.00% | Hiked 25bp on 16 Sep; hawkish dot plot |
| Bank of England Bank Rate | 3.75% | Held on a 6-3 split; hawkish dissent |
| Bank of Japan policy rate | 1.25% | Hiked 25bp on 18 Sep; highest since 1995 |
Key Economic Events This Week (Sydney Time)
| Date & time | Event | Why it matters |
| Mon 22 Sep | Markets digest last week’s Fed/BOJ/BOE decisions | Repricing of rate paths continues |
| Tue 22 Sep, morning | Judo Bank Flash Australia PMI (manufacturing & services) | First read on the domestic economy this month |
| Wed 23 Sep | Flash PMIs — Japan, Eurozone, UK | Global growth pulse ahead of US print |
| Wed 23 Sep, evening | US — S&P Global Flash PMI | Signal on US resilience after the Fed’s hawkish hike |
| Rest of week | Light data calendar | Positioning builds ahead of 29 Sep RBA decision |
| Tue 29 Sep (next week) | RBA rate decision | Falls just outside this week, but the key domestic catalyst now in view |
AUD Outlook
The AUD starts the week with a neutral-to-slightly constructive domestic bias, but significant external downside risk.
The Australian side of the equation has become supportive. Inflation is proving persistent, the RBA’s language has hardened, and the market increasingly expects another rate increase. Thursday’s employment report could reinforce that view.
The US side is less friendly. The Fed has just raised rates, US yields are elevated and the dollar has strengthened. Meanwhile, oil above US$100 keeps global inflation and risk-aversion pressures alive.
For AUD/USD, 0.71 is the immediate level worth watching. Holding above it despite the Fed hike would be encouraging. A recovery through 0.72 would improve the short-term picture; renewed oil escalation or a strong USD could instead push the pair below 0.71.
For clients with USD payment requirements, Tuesday afternoon’s Bullock appearance and Thursday morning’s Australian labour report are the main domestic volatility windows.
For JPY payments, volatility may remain unusually high following the BOJ hike and renewed intervention speculation.
For NZD payments, AUD/NZD at roughly 1.2445 is particularly favourable by recent standards, although that also means the cross could be vulnerable to profit-taking.
Quick Take
AUD-positive: Bullock remains hawkish + Australian employment holds up + oil continues easing + global risk sentiment stabilises.
AUD-negative: Australian jobs disappoint + Fed tightening expectations rise further + Brent returns toward US$110 + Middle East tensions escalate.
Main level: AUD/USD 0.71. Above it, the broader AUD recovery remains credible. Below it, the stronger USD/oil story starts taking control.
Feature risk: the market is now debating which central bank will hike next. Borrowers everywhere would probably prefer they found a new hobby.