Outlook
The Australian dollar (AUD) remains supported by hawkish bets on the RBA and expectations that February policy minutes will reinforce a tightening bias. Commodity demand and China’s continued recovery provide an additional tailwind, while softer US data helps keep the AUD in an advantaged position versus the dollar. Near-term resistance sits toward the 0.715–0.720 area for AUD/USD, with a break above the February 2023 high potentially opening the way to further gains. The AUD has climbed more than 6% year-to-date.
Key drivers
- hawkish expectations for the Reserve Bank of Australia and the February policy minutes
- stronger commodity demand tied to China’s manufacturing rebound
- divergence in rate paths: higher Australian rates vs a more cautious US outlook
- domestic sentiment improvements, such as lifted Westpac consumer confidence
- shifting risk appetite and geopolitical tensions that can alter risk-on/risk-off flows
Range
AUD/USD is near 0.7070 (7-day lows), about 4.8% above its 3-month average of 0.6746, having traded in a fairly wide 10.6% range from 0.6444 to 0.7125.
AUD/EUR around 0.5967, 3-month average 0.5753, range 0.5591–0.6002.
AUD/GBP around 0.5190, 3-month average 0.5015, range 0.4913–0.5231.
AUD/JPY around 108.6, 3-month average 105.3, range 100.9–110.6.
What could change it
- clearer signals from the RBA minutes confirming a broad willingness to tighten further
- shifts in China’s growth path or commodity price moves affecting export income
- stronger U.S. data or a shift in Fed expectations altering rate differentials
- any change in risk sentiment due to geopolitical developments or global financial conditions
- unexpected domestic data surprises (employment, inflation) altering the domestic growth outlook
