Australian Dollar: Modest upside bias into 12 months – Rabobank

FXStreet Insights Team FXStreet

Rabobank’s Senior FX Strategist Jane Foley notes AUD/USD has trended higher since July, mainly due to a softer US Dollar (USD), with the Australian Dollar (AUD) mid-pack versus G10 peers. Shifting expectations for further Reserve Bank of Australia (RBA) rate hikes, especially after strong labour data and softer Q2 CPI, are key drivers. Foley still sees November hike risk and has lifted its 3‑month AUD/USD forecast to 0.71.

RBA path and trade data in focus

"Despite a move lower today, AUD/USD has been gently trending higher since the start of July. The move is mostly the result of the softer USD since in that timeframe, the performance of the AUD is right in the middle of the pack vs. its G10 peers. That said, market expectations regarding the potential for further RBA rate hikes this year have swung in this period, providing a source of direction for the AUD."

"In Rabo’s view there is still risk of one more rate hike this year in November. The market will be hoping that the RBA’s August 11 policy meeting will provide more clarity on rate hike risks. We continue to forecast a modest upside bias in AUD/USD out to 12 months, mostly on the back of a moderately softer tone in the USD and the view that Fed rate hike expectations are overdone."

"We have raised our 3-month forecast to AUD/USD 0.71 from 0.70."

"While the movements in AUD/USD in the coming months will continue to be driven by expectations regarding RBA policy and the perceived inflation risk, today’s better than expected release of Australian trade data does shine a light on structural developments within the economy."

"That said, in terms of near-term impact on the AUD, it is unlikely to outshine the reaction to RBA policy guidance on August 11."

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

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

AUD/USD consolidates near 0.7000 as USD stays weak

AUD/USD holds steady above 0.7000 during Thursday’s Asian session, consolidating the previous day’s recovery gains from a near three-week low as the Democratic sweep in the US midterm elections and Iran diplomacy hopes continue to weigh on the US Dollar. Bulls, however, seem hesitant as focus shifts to Friday’s crucial US NFP report.

USD/JPY drifts lower to 158.25 on hawkish BoJ Minutes, weak USD

USD/JPY trades with a negative bias for the second straight day on Thursday as hawkish BoJ Minutes, showing members agreed to keep raising rates, and intervention risks support the Japanese Yen. Meanwhile, US midterm election results and hopes for Iran diplomacy keep the US Dollar depressed as focus shifts to Friday’s US NFP report.

Gold hits one-week top near $4,080 on sliding US bond yields and weak USD

Gold builds on the previous day’s blowout rally, climbing to $4,080 during the Asian session on Thursday as falling US bond yields keep the US Dollar depressed near a one-month low, touched in reaction to Democrats’ victories in the US midterm elections. However, December Fed hike bets might cap the non-yielding bullion ahead of Friday’s US NFP report.

Circle reserve income falls 8% as ARC presale lifts Q3 revenue

Circle (CRCL) reported increased revenue in its Q3 earnings update on Wednesday as the $182 million ARC token presale offset the decline in reserve income. The stablecoin issuer stated that total revenue and reserve income reached $865 million in Q3, up 17% from a year earlier. Net income from continuing operations increased 5% to $226 million, while adjusted EBITDA climbed 85% to $317 million.

US midterms 2026: Investor Q&A on the Democratic sweep

1. Gridlock replaces the stimulus narrative. A Democratic Congress would constrain Trump's ability to pursue additional fiscal expansion and legislative tax measures. But it cannot simply reverse the president's entire economic agenda. Executive powers, existing legislation and presidential vetoes remain important. 2. AI faces a higher hurdle, not an extinction event.

US Dollar breaks below 101.50 as Democrats sweep Congress

The US Dollar (USD) comes under heavy selling pressure on Wednesday, with the US Dollar Index (DXY) falling around 0.5% to trade near 101.35 after sliding below the 101.50 level. The Greenback retreats to its lowest level in four weeks as investors reassess the political and economic outlook following the Democratic Party's sweeping victory in the United States (US) midterm elections.