Australian Dollar steadies near 14-month highs on RBA hike expectations
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The Australian Dollar (AUD) rises against the US Dollar (USD) on Monday, maintaining its position around a 14-month high of 0.6724, reached on December 26. The AUD/USD pair strengthens as the Aussie Dollar finds support amid growing expectations of interest rate hikes from the Reserve Bank of Australia (RBA). The RBA’s December Meeting Minutes indicated that board members are becoming less confident that monetary policy remains sufficiently restrictive. The minutes also indicated the board is prepared to tighten policy if inflation does not ease as anticipated, putting the spotlight on the fourth-quarter CPI report due January 28. Analysts say that a stronger-than-expected Q4 core inflation print could prompt a rate hike at the RBA’s February 3 meeting. Bloomberg reported Sunday that China’s Ministry of Finance plans to expand targeted investment in priority sectors, including advanced manufacturing, technological innovation, and human capital development. The announcement followed a year-end meeting outlining next year’s fiscal policy priorities. Any impact on China’s economy could affect the AUD, given Australia’s close trade ties with China. China launched the “Justice Mission 2025” drills on Monday, simulating a blockade around Taiwan, according to China Daily, citing Senior Colonel Shi Yi of the People’s Liberation Army (PLA) Eastern Theater Command. The exercises underscore ongoing geopolitical risk in Asia, keeping markets alert to potential spillovers into shipping, semiconductors, and regional FX if the drills are prolonged or repeated. US Dollar declines amid ongoing odds of more Fed rate cuts The US Dollar Index (DXY), which measures the value of the US Dollar against six major currencies, is depreciating and trading around 97.90 at the time of writing. The Greenback faces challenges amid ongoing expectations of two more rate cuts by the Federal Reserve (Fed) in 2026. Traders are likely to focus on the Federal Open Market Committee (FOMC) December…
Filed under: News - @ December 29, 2025 3:11 am