The Australian dollar strengthened against the US dollar on Monday after the release of Australia’s TD-MI inflation measure, which rose to 3.5% year-on-year in December, up from 3.2% previously. On a monthly basis, inflation rose by 1.0% month-on-month in December 2025, the fastest pace since December 2023 and a sharp acceleration from 0.3% in the previous two months.
AUD/USD rose after key economic data in China. It is important to note that any change in the Chinese economy may affect the Australian dollar, as both countries are close trading partners.
Data from the National Bureau of Statistics showed that China’s industrial production rose 5.2% year-on-year in December, accelerating from 4.8% in November, supported by flexible export-led manufacturing activity. China’s GDP rose 1.2% quarter-on-quarter in the fourth quarter of 2025, accelerating from 1.1% in the third quarter and beating the market consensus of 1.0%. On an annual basis, GDP grew 4.5% in the fourth quarter, down from 4.8% in the previous quarter but higher than expectations for a reading of 4.4%.
Meanwhile, retail sales for December rose 0.9% year over year, beating expectations of 1.2% and 1.3% in November. In contrast, industrial production rose 5.2% year-on-year, beating estimates of 5.0% and improving from 4.8% in November.
The US dollar weakens as uncertainty surrounding the issue between the US and Greenland mounts
- The US Dollar Index (DXY), which measures the value of the US dollar against six major currencies, is losing ground and is trading around the 99.20 level at the time of writing. US markets are closed for the Martin Luther King Jr. Day holiday on Monday.
- The dollar faces challenges amid growing risk aversion, driven by rising uncertainty surrounding the issue between the United States and Greenland. US President Donald Trump said on Saturday that he would impose tariffs on eight European countries that oppose his proposal to acquire Greenland.
- According to Bloomberg, Trump stated that a 10% tariff would be imposed on goods from EU members Denmark, Sweden, France, Germany, the Netherlands and Finland, as well as Britain and Norway, starting February 1, until the US is allowed to buy Greenland.
- US labor market data dampened expectations for further interest rate cuts by the Federal Reserve through June. Fed officials did not signal an urgent need to ease policy further until there is clearer evidence that inflation is moving sustainably toward the 2% target.
- Morgan Stanley analysts have revised their forecasts for 2026, and now expect one rate cut in June followed by another in September, compared to their previous forecast of cuts in January and April.
- The U.S. Department of Labor (DOL) reported Thursday that initial jobless claims unexpectedly fell to 198,000 in the week ending January 10, below market expectations of 215,000 and down from the previous week’s revised reading of 207,000. The data confirmed that layoffs are still limited and that the labor market is resilient despite a long period of high borrowing costs.
- The US core CPI, excluding food and energy, rose 0.2% in December, below market expectations, while annual core inflation held steady at 2.6%, equivalent to a four-year low. The data provided a clearer signal of a decline in inflation after previous releases were skewed by the effects of the lockdown. Meanwhile, the CPI rose 0.3% month-on-month in December 2025, in line with market expectations and repeating the rise seen in September. The annual inflation rate remains at an increase of 2.7%, as expected.
- Policymakers at the Reserve Bank of Australia acknowledged that inflation has eased significantly from its peak in 2022, although recent data suggest renewed upward momentum. The headline CPI slowed to 3.4% year-on-year in November, the lowest reading since August, but still above the Reserve Bank of Australia’s target range of 2-3%. Meanwhile, the average CPI fell to 3.2% from an eight-month high in October of 3.3%.
- The Reserve Bank of Australia estimated that inflation risks have tilted modestly to the upside, while downside risks, particularly from global conditions, have diminished. Governing council members expect only one additional rate cut this year, with core inflation expected to remain above 3% in the near term before falling to around 2.6% by 2027.
- ASX 30-day interbank rate futures for February 2026 were trading at 96.35 as of January 16, indicating a 22% chance of a rate hike to 3.85% at the next RBA board meeting.
The Australian dollar is eyeing the 0.6700 area near the nine-day EMA barrier
The AUD/USD pair is trading around 0.6680 on Monday. Daily chart analysis shows that the pair is consolidating around the nine-day Exponential Moving Average (EMA), indicating a neutral bias in the shorter term. The 14-day RSI remains at 52.78 above the midpoint, supporting the bullish momentum.
A daily break below the short-term average could expose the 50-day EMA at 0.6642 as initial support. Further losses will open a downtrend towards 0.6414, the lowest level since June 2025.
A successful break of the nine-day moving average at 0.6690 would reinforce the bullish bias and support AUD/USD to target 0.6766, its highest level since October 2024.
Australian dollar price today
The table below shows the percentage change in the Australian Dollar (AUD) against the major currencies listed today. The Australian dollar was the strongest against the US dollar.
| US dollars | euro | GBP | JPY | Canadian | Australian dollar | New Zealand dollar | Swiss franc | |
|---|---|---|---|---|---|---|---|---|
| US dollars | -0.25% | -0.13% | -0.13% | -0.17% | -0.17% | -0.38% | -0.53% | |
| euro | 0.25% | 0.12% | 0.13% | 0.08% | 0.09% | -0.13% | -0.28% | |
| GBP | 0.13% | -0.12% | 0.02% | -0.04% | -0.04% | -0.25% | -0.40% | |
| JPY | 0.13% | -0.13% | -0.02% | -0.06% | -0.05% | -0.26% | -0.42% | |
| Canadian | 0.17% | -0.08% | 0.04% | 0.06% | 0.01% | -0.20% | -0.36% | |
| Australian dollar | 0.17% | -0.09% | 0.04% | 0.05% | -0.01% | -0.22% | -0.36% | |
| New Zealand dollar | 0.38% | 0.13% | 0.25% | 0.26% | 0.20% | 0.22% | -0.16% | |
| Swiss franc | 0.53% | 0.28% | 0.40% | 0.42% | 0.36% | 0.36% | 0.16% |
The heat map shows the percentage changes in major currencies versus each other. The base currency is chosen from the left column, while the counter currency is chosen from the top row. For example, if you select 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).
Frequently asked questions about the Australian dollar
One of the most important factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country, another major driver is the price of its largest export, iron ore. The health of the Chinese economy, its largest trading partner, is one factor, in addition to Australia’s inflation, its growth rate and its trade balance. Market sentiment – whether investors are snapping up riskier assets (risk on) or looking for safe havens (risk off) – is also a factor, with risk appetite positive for the Australian dollar.
The Reserve Bank of Australia (RBA) influences the Australian dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This affects the level of interest rates in the economy as a whole. The RBA’s main objective is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the Australian dollar, and relatively low interest rates. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former being AUD negative and the latter AUD positive.
China is Australia’s largest trading partner, so the health of the Chinese economy has a major impact on the value of the Australian Dollar (AUD). When the Chinese economy is performing well, it buys more raw materials, goods and services from Australia, which raises demand for the Australian dollar, raising its value. The opposite is the case when the Chinese economy does not grow as quickly as expected. Therefore, positive or negative surprises in Chinese growth data often have a direct impact on the Australian dollar and its crosses.
Iron ore is Australia’s largest export, representing $118 billion annually according to 2021 data, and China is its main destination. Therefore, the price of iron ore could be a driver of the Australian dollar. In general, if the price of iron ore rises, the Australian dollar also rises, as overall demand for the currency increases. The opposite is the case if the price of iron ore falls. Higher iron ore prices also tend to increase the likelihood of a positive trade balance for Australia, which is also positive for the Australian dollar.
The balance of trade, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can affect the value of the Australian dollar. If Australia produces highly sought-after exports, its currency will gain value from the excess demand generated by foreign buyers seeking to buy its exports in exchange for what it spends to buy imports. Therefore, a positive net trade balance strengthens the Australian dollar, with the opposite effect if the trade balance is negative.
