Bias: AUD/PKR is bullish-to-range-bound, trading above its 90-day average and in the upper half of the 3-month range, with cautious optimism about policy moves.
Key drivers:
- Rate gap: The RBA has signaled rate hikes in 2026, while Pakistan’s policy stance remains cautious as inflation eases. This implies a gradual PKR path.
- Risk/commodities: AUD remains tied to commodity prices and China demand; firmer ore and energy prices support AUD, while softer Chinese activity can limit gains.
- Macro factor: Australian inflation data due soon could shift the RBA path and influence AUD/PKR, with a tilt toward tighter policy.
Range: AUD/PKR is likely to drift toward the upper end of the recent range, with occasional tests of the extremes and limited breakout risk.
What could change it:
- Upside risk: stronger Australian inflation or a firmer RBA policy path, supported by resilient jobs data.
- Downside risk: a PKR rally on reforms or stabilizing reserves could push AUD/PKR lower, especially if external funding conditions tighten.
