The Australian Dollar (AUD) inches higher against the US Dollar (USD), rebounding toward the 14-month high of 0.6727 on Tuesday. The AUD finds support amid growing expectations of interest rate hikes from the Reserve Bank of Australia (RBA). Volumes are expected to be thin due to the New Year’s holiday in Australia.
The Reserve Bank of Australia’s (RBA) December Meeting Minutes signaled growing uncertainty among board members about whether monetary policy remains sufficiently restrictive. The policymakers indicated they stand ready to tighten policy if inflation fails to ease as expected, placing increased focus on the Q4 CPI report due January 28. Analysts note that a stronger-than-expected Q4 core inflation reading could trigger a rate hike at the RBA’s February 3 meeting.
The AUD/USD pair could rise as the US Dollar (USD) could face challenges amid ongoing expectations of two more rate cuts by the Federal Reserve (Fed) in 2026. Traders are likely to focus on the Federal Open Market Committee (FOMC) December Meeting Minutes due later in the day.
US Dollar holds ground despite Fed rate cut bets
- The US Dollar Index (DXY), which measures the value of the US Dollar against six major currencies, is gaining ground and trading around 98.00 at the time of writing.
- The Fed lowered interest rates by 25 basis points (bps) at the December meeting, bringing the target range to 3.50%–3.75%. The Fed delivered a cumulative 75 bps of rate cuts in 2025 amid a cooling labor market and still-elevated inflation.
- The CME FedWatch tool shows an 83.9% probability of rates being held at the Fed’s January meeting, up from 80.1% a week earlier. Meanwhile, the likelihood of a 25-basis-point rate cut has fallen to 16.1% from 19.9% a week ago.
- US Initial Jobless Claims declined to 214K from 224K in the prior week, beating the 223K market forecast. Meanwhile, Continuing Jobless Claims rose to 1.923 million from 1.885 million, while the four-week average of Initial Claims edged lower to 216.75K from 217.5K.
- The US Bureau of Economic Analysis (BEA) released delayed data showing that preliminary US Gross Domestic Product (GDP) Annualized expanded 4.3% in the July–September period. The reading exceeded market expectations of a 3.3% increase and surpassed the 3.8% growth recorded in the previous quarter.
- Bloomberg reported Sunday that China’s Ministry of Finance plans to expand targeted investment in priority sectors, including advanced manufacturing, technological innovation, and human capital development. The announcement followed a year-end meeting outlining next year’s fiscal policy priorities. Any impact on China’s economy could affect the AUD, given Australia’s close trade ties with China.
- Australia’s headline inflation rose to 3.8% in October 2025 from 3.6% in September, remaining above the RBA’s 2–3% target range. As a result, markets are increasingly pricing in a rate hike as early as February 2026, with both the Commonwealth Bank of Australia and National Australia Bank projecting a rise to 3.85% at the RBA’s first policy meeting of the year.
- Australia’s Consumer Inflation Expectations rose to 4.7% in December from November’s three-month low of 4.5%, supporting the Reserve Bank of Australia’s (RBA) hawkish stance.
Australian Dollar tests 0.6700 barrier after rebounding from nine-day EMA
AUD/USD is trading around 0.6690 on Tuesday. The technical analysis of the daily chart indicates that the pair remains within the ascending channel pattern, suggesting a persistent bullish bias. The pair holds above a rising nine-day Exponential Moving Average (EMA), preserving the short-term uptrend. The average continues to advance, keeping a bullish bias in place. The 14-day Relative Strength Index (RSI) at 64.22 signals strong momentum.
After rebounding from a nine-day EMA support, the AUD/USD pair is testing the immediate resistance at the psychological level of 0.6700, followed by the 0.6727, the highest level since October 2024, reached on December 29. The daily tone stays positive above the moving average, which could support the pair to break above the latter and explore the region around the upper boundary of the ascending channel at 0.6840.
On the downside, a break below the nine-day EMA at 0.6681, followed by the lower ascending channel boundary around 0.6670, would open the door for the AUD/USD pair to navigate the region around the six-month low near 0.6414, marked on August 21.
Australian Dollar Price Today
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.04% | -0.01% | 0.13% | -0.06% | -0.11% | -0.03% | -0.09% | |
| EUR | 0.04% | 0.03% | 0.17% | -0.02% | -0.07% | 0.00% | -0.05% | |
| GBP | 0.00% | -0.03% | 0.15% | -0.05% | -0.10% | -0.02% | -0.07% | |
| JPY | -0.13% | -0.17% | -0.15% | -0.18% | -0.23% | -0.17% | -0.16% | |
| CAD | 0.06% | 0.02% | 0.05% | 0.18% | -0.04% | 0.05% | -0.02% | |
| AUD | 0.11% | 0.07% | 0.10% | 0.23% | 0.04% | 0.08% | 0.02% | |
| NZD | 0.03% | -0.01% | 0.02% | 0.17% | -0.05% | -0.08% | -0.05% | |
| CHF | 0.09% | 0.05% | 0.07% | 0.16% | 0.02% | -0.02% | 0.05% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).
RBA FAQs
The Reserve Bank of Australia (RBA) sets interest rates and manages monetary policy for Australia. Decisions are made by a board of governors at 11 meetings a year and ad hoc emergency meetings as required. The RBA’s primary mandate is to maintain price stability, which means an inflation rate of 2-3%, but also “..to contribute to the stability of the currency, full employment, and the economic prosperity and welfare of the Australian people.” Its main tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will strengthen the Australian Dollar (AUD) and vice versa. Other RBA tools include quantitative easing and tightening.
While inflation had always traditionally been thought of as a negative factor for currencies since it lowers the value of money in general, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Moderately higher inflation now tends to lead central banks to put up their interest rates, which in turn has the effect of attracting more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in the case of Australia is the Aussie Dollar.
Macroeconomic data gauges the health of an economy and can have an impact on the value of its currency. Investors prefer to invest their capital in economies that are safe and growing rather than precarious and shrinking. Greater capital inflows increase the aggregate demand and value of the domestic currency. Classic indicators, such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can influence AUD. A strong economy may encourage the Reserve Bank of Australia to put up interest rates, also supporting AUD.
Quantitative Easing (QE) is a tool used in extreme situations when lowering interest rates is not enough to restore the flow of credit in the economy. QE is the process by which the Reserve Bank of Australia (RBA) prints Australian Dollars (AUD) for the purpose of buying assets – usually government or corporate bonds – from financial institutions, thereby providing them with much-needed liquidity. QE usually results in a weaker AUD.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the Reserve Bank of Australia (RBA) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the RBA stops buying more assets, and stops reinvesting the principal maturing on the bonds it already holds. It would be positive (or bullish) for the Australian Dollar.
