AUD/USD: Hawkish data underpins gradual gains – OCBC

OCBC’s Christopher Wong highlights that strong January labour data keep Reserve Bank of Australia hike risks alive, lending support to the Australian Dollar despite geopolitical headwinds. With unemployment below RBA projections and markets pricing nearly a full 25 bp hike by June, OCBC maintains a constructive view and targets AUD/USD at 0.73 by end-2026.

Labour strength sustains RBA hike expectations

"January labour market data kept pressure on the RBA to consider a higher cash rate, offering underlying support for the risk-sensitive AUD."

"Still, the currency gained only modestly as geopolitical worries weighed on global equities overnight."

"A firmer global pro-cyclical backdrop should provide a more constructive base for further AUD strength, and we continue to target AUDUSD at 0.73 by end-2026."

"Australia’s unemployment rate held broadly steady at 4.1% in January, while full‑time hiring posted another solid month. Unemployment is running below the RBA’s February projections (4.3% for 2Q26), which should keep the central bank’s tone relatively hawkish."

"Interest rate markets remain aligned with this view, with OIS still pricing nearly a full 25bp hike by June."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)