The AUD\/USD moved higher on Monday, reaching the 0.6660 region after a recent decline, as the US Dollar showed weakness. Upcoming holiday closures will affect global markets, with major exchanges closing by late Wednesday. Early on Tuesday, the Reserve Bank of Australia (RBA) will release meeting minutes, which are expected to impact Australian Dollar traders.<\/p>\n
Despite a recent dip, the Australian Dollar reached a 14-month high last week. The RBA is expected to raise interest rates at least twice in 2026. This supports the AUD as the US Federal Reserve plans potential rate cuts over the next one to two years. US GDP growth figures are due on Tuesday, likely showing a drop to 3.2% for Q3, from the previous 3.8%.<\/p>\n
Key factors affecting the Australian Dollar include RBA interest rates, iron ore prices, and the Chinese economy’s health. The RBA aims for a 2-3% inflation rate via interest rate adjustments. China, Australia’s main trading partner, influences the AUD’s value when it increases imports from Australia. Iron Ore, Australia’s largest export, valued at $118 billion annually, impacts the AUD’s strength, with higher prices boosting the currency. The Trade Balance also influences the AUD, with a surplus strengthening the currency.<\/p>\n
The recent bounce in AUD\/USD presents a clear opportunity for us, driven by a growing policy split between the US Federal Reserve and the Reserve Bank of Australia. We see this divergence as the primary driver for a sustained rally in the Aussie dollar moving into 2026. This setup suggests that any short-term dips are buying opportunities.<\/p>\n
The RBA is providing a solid floor for the currency, with at least two rate hikes widely expected for 2026. We remember how persistent inflation was back through 2024, when the annual CPI rate struggled to fall below 3.5%, and the RBA is signaling it will not ease policy prematurely this time. The meeting minutes this week should confirm this hawkish outlook.<\/p>\n
On the other hand, the US Federal Reserve is preparing for an accelerating pace of rate cuts. This follows the trend of cooling inflation we observed throughout 2024 and 2025, which has allowed the Fed to shift its focus towards supporting a slowing economy. The US Q3 GDP figures due this week are expected to confirm this economic cooling, further justifying the Fed’s dovish stance.<\/p>\n
We also see strength coming from Australia’s key export, iron ore, which has remained firm above $130 a tonne. This price stability is supported by ongoing stimulus measures in China, which are finally gaining traction and boosting demand for industrial commodities. A healthy Chinese economy, which grew around 5% in 2024, is fundamental to Australia’s positive trade balance and the Aussie’s strength.<\/p>\n
Given this backdrop, we should consider positioning for further AUD\/USD strength by buying call options with expiry dates in early 2026. Trading volumes will be low over the holiday week, so we can build positions gradually. The strategy is to be ready for the pair to move higher as markets return to full strength in the new year.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" AUD rises to 0.6660 as USD weakens; RBA minutes, iron ore, and China drive future trends.<\/p>\n","protected":false},"author":62,"featured_media":16966,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-43411","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/43411","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/comments?post=43411"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/43411\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media\/16966"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media?parent=43411"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/categories?post=43411"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/tags?post=43411"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}