The Australian dollar (AUD) has recently shown resilience, buoyed by a boost in global risk appetite and easing US-China trade tensions. As noted by analysts, the current favorable sentiment in the markets has contributed to a notable rally in the AUD, particularly in light of expectations surrounding Australia's inflation figures, which are anticipated to rise in the third quarter of 2025. A potential increase in inflation to 3% could diminish the likelihood of further interest rate cuts from the Reserve Bank of Australia (RBA), thus supporting the strength of the AUD.
Recent assessments highlight key factors influencing the AUD's value, including the RBA's interest rate decisions and commodity price fluctuations. Following a rate cut in August, the AUD hit a two-year low against the US dollar; however, stronger economic signals may result in a corrective trend. The AUD remains highly sensitive to developments in global trade, particularly given its substantial economic reliance on commodities such as iron ore and coal, with demand from China playing a crucial role in this dynamic.
At the same time, the Singapore dollar (SGD) is benefiting from robust economic performance, evidenced by a GDP growth rate of 2.9% year-on-year in Q3 2025, surpassing expectations. The Monetary Authority of Singapore (MAS) has opted to maintain its monetary policy, displaying confidence in the economy despite potential pressures from US tariffs on key exports. The downward revision of core inflation forecasts indicates easing inflationary pressures, which may provide additional stability for the SGD.
Current pricing data reveals that the AUD to SGD exchange rate stands at 0.8513, which is 1.0% above its three-month average of 0.8428. The exchange rate has remained stable within a 3.4% range, reflecting ongoing investor sentiment and economic conditions. Market experts believe that while the AUD may face headwinds due to its sensitivity to external factors, the current economic landscape could favor a continued strengthening of the AUD against the SGD if the anticipated inflation data aligns with expectations and global risk appetite remains bullish.
