AUD/USD surges to near 0.6640 as Australian Dollar outperforms

AUD/USD gains sharply to near 0.6640 as the Australian Dollar outperforms across the board.
The Fed is unlikely to cut interest rates in the January meeting.
Investors await RBA minutes, and the preliminary US Q3 GDP data.

Sagar Dua FXStreet

The AUD/USD pair is up 0.45% to near 0.6640 during the European trading session on Monday. The Aussie pair strengthens as the US Dollar (USD) underperforms its peers, despite traders remaining confident that the Federal Reserve (Fed) will not cut interest rates in the first policy meeting of 2026.

During the press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0025% lower to near 98.45.

US Dollar Price Today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the weakest against the British Pound.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		-0.20%	-0.48%	-0.20%	-0.24%	-0.44%	-0.44%	-0.25%
EUR	0.20%		-0.28%	0.02%	-0.04%	-0.25%	-0.24%	-0.06%
GBP	0.48%	0.28%		0.25%	0.24%	0.03%	0.04%	0.22%
JPY	0.20%	-0.02%	-0.25%		-0.02%	-0.23%	-0.23%	-0.04%
CAD	0.24%	0.04%	-0.24%	0.02%		-0.21%	-0.21%	-0.02%
AUD	0.44%	0.25%	-0.03%	0.23%	0.21%		0.00%	0.19%
NZD	0.44%	0.24%	-0.04%	0.23%	0.21%	-0.00%		0.19%
CHF	0.25%	0.06%	-0.22%	0.04%	0.02%	-0.19%	-0.19%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

According to the CME FedWatch tool, the probability of the Fed reducing interest rates by 25 basis points (bps) to 3.25%-3.50% in the January meeting is 22.5%.

Fed dovish expectations remain slim even as the United States (US) Consumer Price Index (CPI) data for November came in lower than projected.

Going forward, investors will pay close attention to the preliminary Q3 Gross Domestic Product (GDP) data, which will be published on Tuesday. Market participants will closely monitor the data to get fresh cues on the current economic status. The US GDP growth is expected to come in at 3.2% on an annualized basis, lower than 3.8% in the second quarter of the year.

Meanwhile, the Australian Dollar (AUD) outperforms its peers as de-anchored consumer inflation expectations have increased hopes that the Reserve Bank of Australia (RBA) could hike interest rates in the near term. On Friday, the data showed that Consumer Inflation Expectations accelerated to 4.7% from the prior reading of 4.5%.

For fresh cues on the Australian interest rate outlook, investors will focus on minutes of the RBA policy meeting, announced on December 9, in which the central bank left its Official Cash Rate (OCR) steady at 3.6%.

Economic Indicator

RBA Meeting Minutes

The minutes of the Reserve Bank of Australia meetings are published two weeks after the interest rate decision. The minutes give a full account of the policy discussion, including differences of view. They also record the votes of the individual members of the Committee. Generally speaking, if the RBA is hawkish about the inflationary outlook for the economy, then the markets see a higher possibility of a rate increase, and that is positive for the AUD.

Why it matters to traders?

The Reserve Bank of Australia (RBA) publishes the minutes of its monetary policy meeting two weeks after the interest rate decision is announced. It provides a detailed record of the discussions held between the RBA’s board members on monetary policy and economic conditions that influenced their decision on adjusting interest rates and/or bond buys, significantly impacting the AUD. The minutes also reveal considerations on international economic developments and the exchange rate value.

Author

Sagar Dua

FXStreet

Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.

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