Bias: bullish-to-range-bound, AUD/TWD sits above the 90-day average and in the upper half of the 3-month range.
Key drivers:
- Rate gap: The RBA has signalled potential rate hikes in 2026, while Taiwan's central bank has shown more cautious policy signaling, a combination that tends to support AUD against TWD.
- Risk/commodities: China’s inflation softness and softer iron ore demand keep pressure on Australian commodity links, which can cap the AUD’s upside against TWD.
- Macro factor: upcoming Australian CPI (consumer price index) and employment data could move the pair, as hotter prints would reinforce rate-hike expectations.
Range: AUD/TWD is expected to drift within the 3-month range, with occasional tests of the upper boundary if global risk appetite improves.
What could change it:
- Upside risk: clearer guidance on policy tightening from the RBA or stronger Australian data could push AUD higher toward the upper end of the range.
- Downside risk: softer Chinese demand for Australian commodities or a shift toward risk-off trades could weaken AUD and pull the pair toward the lower end.
