The US Dollar (USD) has maintained a strong bullish tone against major currencies, including the Australian Dollar (AUD) and the British Pound (GBP), amid rising expectations for another interest rate hike by the Federal Reserve (Fed) [1][2]. This sentiment was reinforced by the latest S&P Global report, which indicated that US business activity accelerated for a fourth consecutive month in September, reaching the fastest pace of growth since July 2021 [1][2]. As a result, US bond yields remain near multi-year highs, providing further support for the Greenback [1][2].
The AUD/USD pair fell to its lowest level since August 7, trading around the 0.7025 region after the release of Australian jobs data [1]. While the number of employed people in Australia rose by 39,000 in August—beating expectations of a 20,000 increase and reversing a decline of 15,800 in the previous month—the data was overshadowed by a rise in the unemployment rate to 4.6% from 4.5% in July and a drop in full-time jobs [1]. Additionally, disappointing flash PMI data, showing a slowdown in services and a contraction in manufacturing, further weighed on the AUD [1]. These factors have tempered expectations for further tightening by the Reserve Bank of Australia (RBA) beyond the anticipated 25 basis point rate hike next week [1]. Technical analysis shows AUD/USD holding just above the 200-day SMA at 0.7022, with a demand zone near 0.70 likely to attract buyers [1].
Similarly, the GBP/USD pair has remained under pressure, trading near its lowest level since early July at around 1.3230-1.3225 [2]. The British Pound continues to struggle due to the Bank of England's (BoE) cautious stance amid stagflation concerns and a mixed UK business activity report [2]. The divergence between the Fed's hawkish outlook and the BoE's more cautious approach has validated the near-term negative outlook for GBP/USD, supporting the extension of its recent downtrend [2]. Technical analysis indicates that GBP/USD remains bearish below the 100-day SMA, with key support at 1.3139 [2].
According to a weekly performance table, the US Dollar was the strongest against the British Pound, appreciating by 1.16%, and also gained 1.11% against the Australian Dollar [2]. Market participants are awaiting the outcome of a meeting between US President Donald Trump and Chinese President Xi Jinping, which could influence further moves in the currency markets [1][2].
CONCLUSION
The US Dollar's strength, driven by expectations of further Fed rate hikes and robust US business activity, has weighed heavily on both the Australian and British currencies. Weak domestic data and central bank divergence have exacerbated losses for AUD and GBP. Market focus now turns to upcoming central bank decisions and the Trump-Xi summit for further direction.