AUD/USD gains on RBA Minutes, US data curbs upside

• The Australian Dollar advances after the release of the RBA Minutes, highlighting more persistent inflation risks
• RBA policymakers point to a data-dependent approach and do not rule out tighter policy further down the road
• Stronger-than-expected US data underpin the US Dollar, capping the pair’s upside

AUD/USD trades around 0.6680 on Tuesday at the time of writing, up 0.40% on the day. However, the pair is slightly off a three-month high of 0.6700 reached earlier in the day, with the pullback triggered by better-than-expected US economic releases that provided fresh support to the US Dollar.

The Australian Dollar finds support after the publication of the Reserve Bank of Australia (RBA) Minutes from its December monetary policy meeting. The Minutes reveal that board members are becoming less confident that current monetary policy settings remain sufficiently restrictive, as evidence mounts that inflation pressures may prove more persistent than previously expected.

The Reserve Bank of Australia emphasized a data-dependent approach going forward, noting that several inflation indicators will be released ahead of the February meeting. Policymakers discussed whether a rate increase might be needed at some point in 2026, while stressing that it would take more time to properly assess the persistence of inflationary pressures.

Market pricing reflects this cautious stance. Australian 30-Day Interbank Cash Rate Futures for February 2026 imply a relatively low chance of a near-term rate hike, although expectations for tighter policy later on remain in place. Meanwhile, Australia’s Consumer Inflation Expectations rose to 4.7% in December from November’s three-month low of 4.5%, reinforcing the RBA’s hawkish bias amid elevated inflation risks.

On the US side, the US Dollar draws support from a string of stronger-than-expected macroeconomic releases. The US Bureau of Economic Analysis reported that the economy expanded at an annualized rate of 4.3% in the third quarter, well above the previous estimate of 3.3% and market expectations of 3.8%. Inflation components of the report also surprised to the upside, with the GDP Price Index rising 3.7% in Q3, while Core Personal Consumption Expenditures increased 2.9%, underscoring persistent price pressures in the US economy.

Labor market indicators have also contributed to the US Dollar’s resilience. The ADP Employment Change report showed that private sector job growth remained mitigated, reinforcing the view of a still-tight labor market despite signs of moderation elsewhere. Meanwhile, Industrial Production edged lower by 0.1% MoM in October, missing expectations for a modest increase but not enough to derail confidence in the broader economic outlook.

In addition, US Consumer Confidence for December fell to 89.1 from 92.9 in the previous month, pointing to some softening in household sentiment amid elevated interest rates and persistent inflation concerns.

Taken together, these releases have helped the US Dollar stabilize after recent weakness, prompting AUD/USD to retreat modestly from its intraday and three-month highs.