The Australian Dollar (AUD) holds losses against the US Dollar (USD) following the release of China’s Services Purchasing Managers’ Index (PMI) on Monday, which fell to 52.0 in December from 52.1 in November. RatingDog reported last week that the manufacturing PMI rose to 50.1 in December from 49.9 in November. It is important to note that any change in the Chinese economy may affect the Australian dollar, as China and Australia are close trading partners.
The Australian dollar could receive support as expectations of an interest rate hike by the Reserve Bank of Australia (RBA) increase. Traders await Australia’s fourth-quarter CPI report due on January 28, with analysts indicating that a stronger-than-expected core inflation reading could lead to a rate hike at the Reserve Bank of Australia’s February 3 meeting. RBA Governor Michelle Bullock said earlier that while the board had not explicitly considered raising interest rates, it had discussed the circumstances under which interest rates might need to be increased in 2026.
AUD/USD falls as the US dollar strengthens on safe-haven demand, driven by a renewed rise in geopolitical risks following the US arrest of Venezuelan President Nicolas Maduro.
The US dollar rises amid US-Venezuelan tensions
- The US Dollar Index (DXY), which measures the value of the US dollar against six major currencies, is gaining strength and trading around the 98.60 level at the time of writing. ISM Manufacturing PMI data will be released later today.
- CNN reported over the weekend that US President Donald Trump’s administration launched a “large-scale strike against Venezuela” and detained President Maduro to face charges, without congressional approval. Trump said the United States will manage Venezuela until a safe, orderly, and wise transition is achieved.
- The Guardian reported on Monday that President Trump warned that Washington could launch a new military intervention if Venezuela’s interim president, Delcy Rodriguez, fails to meet American demands. He also made statements about Colombian leadership, floated the idea of ”Operation Colombia,” criticized Mexico for not organizing its efforts, and suggested that Cuba appeared close to collapse.
- Traders expect two additional Fed rate cuts in 2026. Markets are preparing for US President Donald Trump to nominate a new Fed head to replace Jerome Powell when his term ends in May, a move that could push monetary policy towards lower interest rates.
- Minutes from the December Federal Open Market Committee (FOMC) meeting last week indicated that most participants viewed it as likely appropriate to stand for further interest rate cuts if inflation declines over time. Meanwhile, some Fed officials said it may be better to leave interest rates unchanged for a while after the committee made three rate cuts this year to support the weak labor market.
- China’s official manufacturing PMI rose to 50.1 in December, compared to 49.2 in the previous reading. The reading was higher than the market consensus of 49.2 in the aforementioned month. The ONS non-manufacturing PMI rose to 50.2 in December from 49.5 in November. Market expectations for print were 49.8.
- Minutes from the Reserve Bank of Australia’s December meeting indicated that policymakers are prepared to tighten policy if inflation fails to ease as expected, with increasing focus on the fourth-quarter CPI report due on January 28. Analysts note that a stronger-than-expected Q4 core inflation reading could lead to a rate hike at the Reserve Bank of Australia’s February 3 meeting.
- Headline inflation in Australia rose to 3.8% in October 2025 from 3.6% in September, remaining above the Reserve Bank of Australia’s target range of 2-3%. As a result, markets are increasingly anticipating a rate hike as early as February 2026, with both the Commonwealth Bank of Australia and National Australia Bank forecasting a rise to 3.85% at the RBA’s first policy meeting of the year. Consumer inflation expectations rose to 4.7% in December from a three-month low of 4.5% in November.
The Australian dollar is hovering around the nine-day EMA
The AUD/USD pair is trading around 0.6680 on Monday. Technical analysis of the daily chart indicates that the pair is hovering around the lower border of an ascending channel pattern. More trends will provide a clear directional bias. The 14-day Relative Strength Index (RSI) at 59.60 indicates bullish momentum, with room for further upside before overbought conditions emerge.
AUD/USD is testing the spot barrier at the nine-day EMA at 0.6681. A break above this level would support the pair to test the psychological level of 0.6700, followed by 0.6727, the highest level since October 2024, which was reached on December 29. Further gains may allow the pair to approach the upper border of the ascending channel near 0.6810.
On the downside, AUD/USD is testing the lower limit of the ascending channel around 0.6680. A break below the channel could expose the AUD/USD pair to the area around the six-month low near 0.6414 hit on August 21.
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 weakest against the US dollar.
| US dollars | euro | GBP | JPY | Canadian | Australian dollar | New Zealand dollar | Swiss franc | |
|---|---|---|---|---|---|---|---|---|
| US dollars | 0.23% | 0.16% | 0.09% | 0.25% | 0.21% | 0.20% | 0.18% | |
| euro | -0.23% | -0.07% | -0.09% | 0.02% | -0.02% | -0.02% | -0.05% | |
| GBP | -0.16% | 0.07% | -0.04% | 0.09% | 0.06% | 0.04% | 0.02% | |
| JPY | -0.09% | 0.09% | 0.04% | 0.15% | 0.12% | 0.11% | 0.09% | |
| Canadian | -0.25% | -0.02% | -0.09% | -0.15% | -0.03% | -0.04% | -0.07% | |
| Australian dollar | -0.21% | 0.02% | -0.06% | -0.12% | 0.03% | -0.01% | -0.03% | |
| New Zealand dollar | -0.20% | 0.02% | -0.04% | -0.11% | 0.04% | 0.00% | -0.02% | |
| Swiss franc | -0.18% | 0.05% | -0.02% | -0.09% | 0.07% | 0.03% | 0.02% |
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.
