Bias: bullish-to-range-bound, as AUD/PKR sits above its 90-day average and in the upper half of the three-month range.
Key drivers:
- Rate gap: The RBA signals potential rate hikes in 2026, widening the policy gap with Pakistan, where policy is cautious as inflation cools and domestic growth holds steady, a setup that supports the AUD when global risk appetite remains firm.
- Risk/commodities: China’s softer inflation dampens demand for Australian commodities, reducing upside from iron ore and coal.
- Macro factor: Upcoming Australian CPI and Labour Force data could tilt bets on the RBA path, with stronger readings boosting higher-rate bets and weaker data adding to near-term volatility.
Range: The pair is likely to drift within the three-month range, with modest upside toward the upper end as liquidity and cross-border flows stay supportive in the region.
What could change it:
Upside risk: stronger Australian data or a hawkish turn by the RBA.
Downside risk: renewed PKR weakness from external financing pressures or softer demand for commodities from China.
