Australian Dollar trades near monthly high, above 0.7000 as hawkish RBA offsets USD uptick
- AUD/USD attracts buyers for the fourth day amid hawkish comments from RBA officials.
- China’s upbeat Q3 GDP print published on Monday lends additional support to the AUD.
- Oil-driven inflation fears reinforce Fed hike bets, which support the USD and cap gains.
The AUD/USD pair trades with a positive bias for the fourth straight day, holding steady above the 0.7000 psychological mark during the Asian session on Wednesday and flirting with the monthly high it touched the previous day.
The Australian Dollar (AUD) continues to be underpinned by hawkish signals from Reserve Bank of Australia (RBA) officials, keeping rate-hike expectations alive ahead of the November 3 policy meeting. In fact, RBA Assistant Governor Christopher Kent said on Monday that there are reasonable indications that neutral interest rates are increasing both domestically and globally, while Deputy Governor Andrew Hauser warned earlier today that Q3 trimmed-mean inflation may run hotter than expected.
Adding to this, China's upbeat Q3 GDP print, showing that the economy grew by 4.5% year-over-year during the July-September period, acts as a tailwind for the Aussie. Meanwhile, the US Dollar (USD) builds on the overnight modest bounce from a nearly three-week low as oil-driven inflation fears underpin prospects for further tightening by the Federal Reserve (Fed). In fact, traders are currently pricing in over a 90% chance of a Fed rate hike in December, supporting the buck and capping the AUD/USD pair.
Traders, however, might refrain from placing aggressive bullish bets on the safe-haven Greenback amid renewed hopes for US-Iran peace talks. In fact, media reports said that Qatar and Pakistan had offered a "middle ground" plan to the U.S. and Iran that met the demands of both sides. This, in turn, warrants some caution before confirming that the recent USD corrective decline from the highest level since April 2025 has run its course, as the focus remains on further developments surrounding the Middle East crisis.
AUD/USD daily chart
Technical Analysis
The AUD/USD pair confirms a breakout through a short-term trading range and now eyes a move beyond the 38.2% Fibonacci retracement barrier at 0.7024. Any further move up, however, might confront a hurdle near the 200-day Simple Moving Average (SMA) at 0.7048. This is followed by the mid-range 50.0% retracement at 0.7064, which keeps the near-term bias bearish and suggests that spot prices might struggle to reclaim the pivot area within the broader corrective structure.
On the downside, initial support emerges at the 23.6% retracement at 0.6974, ahead of the structural floor anchored near 0.6893, where buyers would be expected to defend the broader range.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Australian Dollar FAQs
One of the most significant 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 key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.
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 influences the level of interest rates in the economy as a whole. The main goal of the RBA 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 AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.
China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.
Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
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