Australian Dollar Trend Forecast: Over 6% Increase by Early 2026, Multiple Factors Boost Future Outlook

The Australian dollar (AUD) has shown strong performance at the start of 2026. Since the beginning of the year, the AUD has appreciated by 6% against the US dollar, and even more, it has risen 5% against the Japanese yen. This wave of AUD strength has attracted widespread market attention. On February 9, the AUD/USD reached 0.7098, hitting a new high since February 2023; on the same day, the AUD/JPY surged to 110.79, a record since 1990. Such gains in just a few weeks are truly remarkable.

Central Bank Rate Hikes and Commodity Boom Drive the AUD’s Record Highs

The rapid short-term rise of the AUD is driven by two powerful forces. The first is changes in monetary policy. On February 3, the Reserve Bank of Australia announced a 25 basis point rate hike, becoming the second major central bank after the Bank of Japan to begin a cycle of rate increases. This move marks a significant shift in the global interest rate environment and provides a solid policy foundation for the AUD’s appreciation.

Market expectations for the RBA’s future policies are high. With inflationary pressures still present and the strong performance of the local labor market, analysts generally believe the RBA will continue to raise rates throughout the year. Market forecasts indicate a 74% chance of a rate hike in May, further reinforcing the AUD’s upward momentum.

Commodity Exports Provide Sustained Support for the AUD

The second driving force is the performance of the commodities market. As a major global exporter of commodities, Australia’s economy is closely linked to international commodity prices. Recently, prices for key commodities like gold, silver, and copper have remained robust, with strong global demand for these goods. This directly benefits Australia’s export income, increasing foreign exchange earnings and supporting the AUD’s continued rise. This fundamental strength makes the AUD’s outlook relatively optimistic.

Risks to Watch: Commodity Price Fluctuations and Geopolitical Tensions

However, any upward trend carries potential risks. Market analysts warn that the AUD’s strength is not invulnerable. If commodity prices fall sharply, the AUD could face depreciation pressures. Additionally, worsening geopolitical tensions pose a threat—being a risk asset currency, the AUD often faces selling pressure during periods of heightened global risk sentiment.

AUD Outlook: Experts Optimistic About Further Gains in the Next Six Months

Despite these risks, strategists like Imre Speizer from Westpac Bank remain optimistic. He states, “The AUD/USD will form a new trading range between 0.68 and 0.72, with potential for further upside. Given the strong fundamentals, it’s reasonable to expect the AUD to break above 0.75 within the next six months.”

This forecast reflects market confidence in the AUD’s fundamentals. The combination of the rate hike cycle, a resilient labor market, and sustained global commodity demand supports this outlook. However, investors should remain attentive to commodity price swings and international political developments, as these external factors could alter market expectations at any time.