The Australian dollar (AUD) rose against the US dollar (USD), reaching a 14-month high of 0.6727 on Monday. AUD/USD is strengthening as the Australian dollar finds support amid rising expectations of an interest rate hike from the Reserve Bank of Australia (RBA).
Minutes from the RBA’s December meeting indicated that board members were becoming less confident that monetary policy remained sufficiently restrictive. The minutes also indicated that the Governing Council is prepared to tighten policy if inflation does not decline as expected, highlighting the fourth-quarter CPI report scheduled for release on January 28. Analysts say a stronger-than-expected Q4 core inflation reading could lead to a rate hike at the Reserve Bank of Australia’s February 3 meeting.
Bloomberg reported on 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 came after an end-of-year meeting that set fiscal policy priorities for the coming year. Any impact on the Chinese economy could affect the Australian dollar, given Australia’s close trade relations with China.
China launched the “Justice Mission 2025” exercise on Monday, simulating a blockade around Taiwan, according to the China Daily, citing Colonel Shi Yi of the People’s Liberation Army’s Eastern Theater Command. The drills underscore the ongoing geopolitical risks in Asia, keeping markets alert to potential ramifications on shipping, semiconductors and regional foreign exchange if the drills are prolonged or repeated.
The US dollar advances despite persistent prospects of further Fed interest rate cuts
- The US Dollar Index (DXY), which measures the value of the US dollar against six major currencies, has recovered its daily losses and is trading around the 98.10 level at the time of writing. However, the dollar may face challenges amid continued expectations of two additional interest rate cuts by the Federal Reserve in 2026. Traders will likely focus on the minutes of the December Federal Open Market Committee (FOMC) meeting scheduled for release on Tuesday.
- The Fed cut interest rates by 25 basis points at its December meeting, bringing the target range to 3.50%-3.75%. The Fed cut cumulative interest rates by 75 basis points in 2025 amid a cool labor market and still-high inflation.
- The CME FedWatch tool shows an 81.7% probability of holding interest rates at the Fed’s January meeting, up from 77.9% the week before. Meanwhile, the probability of a 25 basis point rate cut fell to 18.3% from 22.1% a week ago.
- Initial unemployment claims in the US fell to 214K from 224K the previous week, beating market expectations of 223K. Meanwhile, continuing unemployment claims rose to 1.923 million from 1.885 million, while the four-week average initial claims fell to 216.75 thousand from 217.5 thousand.
- The US Bureau of Economic Analysis (BEA) released late data showing that preliminary US GDP on an annual basis expanded 4.3% in the July-September period. The reading exceeded market expectations with an increase of 3.3% and exceeded the 3.8% growth recorded in the previous quarter.
- 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 in Australia rose to 4.7% in December from November’s three-month low of 4.5%, supporting the Reserve Bank of Australia’s hawkish stance.
The Australian dollar reaches a 14-month high above 0.6700
The AUD/USD pair is hovering around 0.6720 on Monday. Technical analysis on the daily chart shows that the pair is moving upward within an ascending channel pattern, indicating a continuation of the bullish bias. The pair is holding above the bullish nine-day exponential moving average (EMA), maintaining the uptrend in the short term. The average continues to advance, keeping the bullish bias in place. The 14-day Relative Strength Index (RSI) at 70.24 (overbought) indicates strong momentum but extended conditions.
Immediate resistance lies at 0.6727, the highest since October 2024, while the daily tone remains positive above the moving average. A break above this level would support the AUD/USD pair to explore the area around the upper border of the ascending channel at 0.6830.
Failure to clear the near maximum could trigger a pause or decline towards the nine-day moving average at 0.6683, followed by the lower limit of the ascending channel around 0.6660. A break below the channel would expose a six-month low near 0.6414, which was hit on August 21.
(The technical analysis for this story was written with the help of an artificial intelligence tool.)
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 New Zealand dollar.
| US dollars | euro | GBP | JPY | Canadian | Australian dollar | New Zealand dollar | Swiss franc | |
|---|---|---|---|---|---|---|---|---|
| US dollars | 0.11% | 0.09% | -0.14% | 0.05% | 0.01% | 0.22% | 0.10% | |
| euro | -0.11% | -0.02% | -0.26% | -0.06% | -0.09% | 0.12% | -0.01% | |
| GBP | -0.09% | 0.02% | -0.23% | -0.04% | -0.07% | 0.14% | 0.01% | |
| JPY | 0.14% | 0.26% | 0.23% | 0.18% | 0.16% | 0.36% | 0.19% | |
| Canadian | -0.05% | 0.06% | 0.04% | -0.18% | -0.04% | 0.18% | 0.05% | |
| Australian dollar | -0.01% | 0.09% | 0.07% | -0.16% | 0.04% | 0.21% | 0.09% | |
| New Zealand dollar | -0.22% | -0.12% | -0.14% | -0.36% | -0.18% | -0.21% | -0.12% | |
| Swiss franc | -0.10% | 0.00% | -0.01% | -0.19% | -0.05% | -0.09% | 0.12% |
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.
