The AUD to USD exchange rate currently shows a bullish bias.
Key drivers include:
- Interest rates: The Reserve Bank of Australia is expected to raise rates to 3.85% by early 2026, enhancing the AUD's appeal compared to a potential weakening USD.
- Global economic outlook: A positive trajectory in Australia’s economic conditions bodes well for the AUD, especially relative to the anticipated rate cuts by the Federal Reserve.
- Commodity prices: As a commodity currency, the AUD is likely to gain strength if global demand for Australian exports, particularly energy and minerals, remains stable or increases.
In the near term, the AUD/USD is likely to trade within a stable range, reflecting current market stability.
Upside risks could arise from stronger-than-expected commodity prices, while downside risks might include sudden shifts in U.S. economic policy or deterioration in global risk sentiment.
