The AUD/USD pair pushed higher on Friday, almost reaching the level of 0.6700 after bouncing back from earlier experienced losses. Traders got more confident in the pair positive movement after chatter picked up that the Reserve Bank of Australia might hike rates sooner than people thought. That shift in mood brought buyers back in after a pretty cautious start to the week.
RBA keeps the Aussie steady
RBA Governor Michele Bullock didn’t say a rate hike was coming right away, but her recent comments definitely stoked speculation. The central bank admitted it could tighten policy in 2026 if inflation sticks around. Now, everyone’s eyeing Australia’s fourth-quarter CPI, which lands January 28. If inflation comes in hot, the RBA’s February meeting could get interesting. All this has given the Aussie dollar a solid floor and sent AUD/USD higher.
The manufacturing sector is also seemingly holding up . The S&P Global Manufacturing PMI held at 51.6 in December — on par with November and just a fraction below the earlier flash estimate. Sure, growth slowed a little bit this month, but the index remained above 50, indicating that activity in the sector is still expanding.
Australia’s economic numbers chipped in too. The S&P Global Manufacturing PMI held at 51.6 in December — on par with November and just a fraction below the earlier flash estimate. Sure, growth slowed a little bit this month, but the index remained above 50, indicating that activity in the sector is still expanding. Output and new orders kept climbing, even with tighter financial conditions. That kind of resilience boosts confidence in the local currency.
US dollar stays weak; Aussie gets a lift
Meanwhile, the US dollar has been on the back foot. Traders are now expecting two more Fed rate cuts in 2026, which puts more wind behind the Aussie. On top of that, uncertainty about who will lead the Fed next has led markets to bet on looser policy. Put it all together, and AUD/USD keeps trending up. For now, traders are glued to every inflation print and central bank update to see what’s next.
