The Aussie dollar is trading near the recent highs ahead of a speech by the country’s central bank head.
AUDUSD – Daily Chart
The AUDUSD has an intersection of two key levels at the 0.6950 level, which are the September 2024 highs. There is also a collection of resistance levels that trace back to February 2025.
The Reserve Bank of Australia lifted the cash rate to 3.85% earlier this month, its first hike in more than two years, after its Monetary Policy Board unanimously decided that inflation was too high.
The board said inflation had risen sharply since mid-2025 and it was now expected to stay above the Reserve Bank’s 2–3% target band for longer than forecast. Stronger-than-expected household spending, investment and housing activity were said to be the drivers of higher inflation
The RBA governor will speak around 3:40 pm HKT on Wednesday and has previously said that rising interest rates would mean pain for borrowers, but warned that leaving inflation unchecked would ultimately be worse.
However, one major bank said that the RBA had been wrong on inflation, and Bullock was also accused by one Senator of “gaslighting” the nation over the economy.
Goldman estimates that price growth for “administered” goods and services accounted for most of the inflation increase during the first half of 2025, and by the end of 2025 it had accelerated to 7.6% year over year. Inflation was up by 2.8% annually when these administered prices were removed. Goldman does not see the increase in administered prices as a long-term factor.
In 2025, Australian wages grew more slowly than inflation, eroding consumers’ purchasing power. That is a concern for the central bank when considering further rate cuts.
On the US side, the economy grew at an annual pace of 1.4% in the three months to December, falling back from 4.4% in the prior quarter. That highlighted a turbulent year for the economy, and there is now further uncertainty over the future for growth after the Supreme Court reversed the Trump tariffs, which have been a key focal point of his strategy.
“The core of the economy is resilient,” said Michael Pearce, chief economist at Oxford Economics, adding that he expected growth to pick up again this year. However, much of the growth has been from AI investment, and the recent slowdown in AI themes could be a headwind for spending.
