The Australian Dollar is experiencing a period of mixed signals. It recently weakened against the US dollar amidst disappointing domestic economic data, including a drop in consumer sentiment and dwelling approvals. However, positive business confidence and a hawkish stance from the Reserve Bank of Australia (RBA) are providing some support. The AUD/USD pair is consolidating below recent highs, influenced by both domestic factors and US dollar weakness.
- Consumer sentiment fell to a ten-month low in February 2026.
- Dwelling approvals plunged in December 2025.
- NAB’s Business Confidence Index edged up in January 2026.
- The RBA hiked its OCR by 25 basis points to 3.85%.
- Australian GDP growth is slowing but in an orderly fashion.
- The labour market continues to outperform expectations.
- Inflation remains above the RBA’s target band.
- China provides a broadly supportive backdrop.
- Markets are pricing in additional tightening by year-end.
- Non-commercial traders lifted their net long exposure to the Aussie.
Overall, the Australian Dollar faces a complex landscape. While some domestic economic indicators are concerning, robust employment figures and the RBA’s commitment to controlling inflation offer some support. The currency’s performance is also influenced by global factors, including the strength of the US dollar and developments in China. This points towards continued volatility and a need for careful monitoring of both domestic and international economic trends.