**AUD/USD Holds Firm Near 0.6600 as US Dollar Faces Pressure from Potential Government Shutdown and Weak PMI Data**
*Adapted and expanded from an article by FXStreet’s Sagar Dua. Additional insights and context provided from Reuters and Bloomberg.*
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**Overview**
The Australian Dollar (AUD) maintained its ground against the US Dollar (USD) in the early New York session, with the AUD/USD currency pair stabilizing around the 0.6600 level on October 3, 2025. This resilience comes as the US Dollar faces considerable selling pressure due to heightened concerns over a potential US government shutdown and disappointing macroeconomic data, especially in the manufacturing sector. The market’s risk sentiment is also influenced by monetary policy expectations for both the Federal Reserve and the Reserve Bank of Australia (RBA).
This comprehensive analysis explores the recent performance of AUD/USD, the drivers behind the greenback’s decline, and the broader macroeconomic and policy environment shaping currency movements.
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**Key Events Influencing AUD/USD**
1. **US Dollar Weakening**
– **Government Shutdown Risks:** Ongoing debates in the US Congress over the budget increased the odds of a government shutdown, unsettling investors and weighing on the USD.
– **Weaker-Than-Expected US Manufacturing Data:** The latest Institute for Supply Management (ISM) Manufacturing Purchasing Managers’ Index (PMI) for September dropped to 47.8, well below market expectations and prior readings, signaling contraction in the sector.
– **Soft Economic Data:** Additional data, such as the subdued ADP private payrolls report, reinforced the perception of a slowing US economy.
– **Yields Pullback:** Recent moves in the US Treasury market show some reversal from multi-year highs as recession fears grow.
2. **Australian Dollar Factors**
– **Chinese Economic Recovery:** As a major trade partner, China’s ongoing recovery supports the Australian export sector, buoying the Aussie dollar.
– **RBA Monetary Policy:** The Reserve Bank of Australia maintained a steady policy stance multiple times through the year, providing guidance suggesting patience before any further tightening.
– **Commodity Prices:** Iron ore and other key commodity prices remain elevated, providing fundamental support to the resource-driven Australian economy.
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**Detailed Analysis**
### US Dollar (USD) Under Pressure
The US Dollar Index (DXY), which measures the greenback against a basket of six major currencies, retreated from recent highs amid several headwinds.
– **Congressional Deadlock and Shutdown Risks:**
A possible government shutdown looms as lawmakers struggle to pass a budget extension. Government shutdowns typically lead to decreased investor confidence and hamper economic activity as federal workers are furloughed and key services temporarily halted. Previous shutdowns have negatively impacted employment numbers and delayed significant economic data releases.
– **Soft Macro Data:**
– **ISM Manufacturing PMI:** Dropping to 47.8 in September from 49.0 in August, the PMI reading signals contraction
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