Bias: Bearish-to-range-bound, as AUD/ILS trades below its 90-day average and sits in the lower half of the 3-month range, suggesting limited upside unless catalysts emerge.
Key drivers:
- Rate gap: RBA has signaled possible rate hikes in 2026, according to minutes and officials, while the Bank of Israel cut rates, widening the policy stance gap in favor of the AUD and supporting its yield appeal if global risk appetite holds.
- China macro: China's uneven recovery shapes demand for Australian commodities and thus AUD, with softer Chinese inflation potentially easing gains even as iron ore demand remains a key limiter.
Range: Expect a drift within the 3-month range, with a tendency to test the lower bound rather than break it over the coming weeks.
What could change it:
- Upside risk: clearer RBA guidance toward tightening in 2026 or stronger domestic data that confirms momentum.
- Downside risk: softer Australian data or a renewed risk-off mood that drives investors toward safe-haven currencies.
