The Australian Dollar experienced a mixed trading day, holding steady near three-year highs against some currencies while extending losses against the US Dollar. The Aussie was supported by a robust trade surplus, a hawkish Reserve Bank of Australia policy stance, and positive economic data. However, a stronger US Dollar, driven by expectations of slower Federal Reserve rate cuts, weighed on the AUD/USD pair. Market expectations point to further RBA rate hikes in the near future.
- Australia’s trade surplus widened to AUD 3.37 billion in December 2025.
- Exports grew, driven by metal ores and minerals, while imports fell.
- The RBA raised rates to 3.85% and signaled potential for further tightening.
- Markets anticipate an 80% chance of a May rate hike.
- The AUD hit a multi-year high against the Japanese Yen.
- China’s Services PMI rose, potentially impacting the AUD due to China’s importance as a trading partner.
- Australia’s Composite PMI rose to its strongest level in 45 months.
- RBA Governor indicated inflation pressures remain a concern.
- The US Dollar strengthened as markets priced in slower Fed rate cuts.
- Australian inflation gauges show varying results, with some indicating a slowdown in inflation.
- Australian job advertisements increased, signaling renewed hiring momentum.
Overall, the Australian Dollar is being influenced by domestic and international factors. Positive trade data and a central bank inclined towards further rate hikes provide support. However, strength in the US Dollar and global economic uncertainties create headwinds. The interplay of these forces will likely determine the direction of the currency in the near term.