Outlook
Outlook The AUD has been supported by hawkish RBA signals and solid commodity demand, nudging it toward multi-month highs. The February 3 rate hike to 3.85% reinforces the higher-for-longer stance, underpinning the currency alongside resilient exports and a softer USD. If February inflation data or near-term inflation expectations ease, rate expectations could shift slightly, potentially capping further gains. In the near term, market risk appetite will be a key driver; a constructive appetite tends to lift the AUD given its commodity link, while risk-off sentiment can limit gains or weigh on the pair.
Key drivers
- RBA rate path: 25 basis point hike to 3.85% (Feb 3) reinforces hawkish stance and supports the AUD.
- Inflation momentum: CPI at 3.8% (Dec) exceeds the target band, boosting expectations of continued tightening.
- External demand: Trade-weighted index up around 5% since late 2025 SMP signals stronger export demand and a weaker USD backdrop.
- China's policy: PBoC easing stance and rate cuts support demand for Australian commodities, aiding the AUD.
- Market sentiment: AUD tends to be a risk-on currency; improvements in global risk appetite can sustain gains, while uncertainty or risk-off moves can weigh on it.
Range
AUDUSD is at 90-day highs near 0.7125, about 6.0% above its 3-month average of 0.6718, having traded in a 0.6444–0.7125 range. AUD/EUR sits near 0.6002 (90-day highs), about 4.6% above its 3-month average of 0.5735, with a 0.5591–0.6002 range. AUD/GBP near 0.5231 (90-day highs), roughly 4.5% above its 3-month average of 0.5004, trading in a 0.4913–0.5231 range. AUDJPY around 109.1 (7-day lows), about 4.0% above its 3-month average of 104.9, with a 100.8–110.6 range.
What could change it
- Further RBA actions: additional hikes or guidance that maintains hawkish expectations could lift the AUD; signs of easing or rate cuts could weaken it.
- USD moves: a stronger USD tends to pressure the AUD; a softer USD supports it.
- Commodity prices: firm iron ore, coal, and LNG prices support the AUD; declines weigh on it.
- China policy and growth: stronger Chinese growth or looser policy boosts AUD demand; tighter conditions or slower growth could dent it.
- Global risk sentiment: sustained risk-on environment supports the AUD; sudden risk-off episodes can cap or reverse gains.
