AUD/USD corrects from three-year high as US dollar rebounds

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At the time of writing on Friday, AUD/USD was trading around 0.7000, down 0.60% on the day after retreating from a three-year high reached earlier this week. The pair thus snaps a three-day winning streak amid a technical correction and a moderate augment in support for the US dollar (USD).

The Australian dollar (AUD) remains under pressure following the release of the Australian Producer Price Index (PPI), which rose 3.5% y/y in the fourth quarter of 2025, unchanged from the previous quarter. These figures point to stable higher-level inflation with no further acceleration, limiting immediate enthusiasm for the Australian currency. Nevertheless, the Australian dollar maintains basic support after hotter-than-expected consumer inflation data released earlier this week, which strengthened expectations for monetary policy tightening in the near future.

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Markets are currently pricing in a greater than 70% probability that the Reserve Bank of Australia (RBA) will augment interest rates by 25 basis points at its next meeting, compared to the current interest rate of 3.6%. Interest rate expectations also point to levels near 3.85% by May and around 4.10% by September, which could ultimately limit the scope for AUD/USD pullback.

On the American side, the US dollar (USD) manages to recover some of its recent losses. The announcement of the nomination of Kevin Warsh to head the Federal Reserve (Fed), replacing Jerome Powell, reassured investors in the independence of the central bank. Additionally, reports suggesting that a budget agreement between Democrats and Republicans in Congress is still possible have revived hopes of avoiding another government shutdown, providing additional support for the US dollar.

In the background, the latest US producer price data shows that inflation remains stable. The Producer Price Index rose 3% y/y in December, above market expectations, while its underlying component also accelerated to 3.3% y/y. This combination of factors is contributing to a momentary rebalancing in favor of the US dollar, which will negatively impact AUD/USD in the compact term, despite the continued favorable monetary policy outlook in Australia.

Today’s Australian dollar price

The table below shows the current percentage change of the Australian Dollar (AUD) against the major listed currencies. The Australian dollar was strongest against the Japanese yen.

USD EUR GBP JPY BOOR AUD NZD CHF
USD 0.41% 0.37% 0.82% 0.25% 0.39% 0.09% 0.38%
EUR -0.41% -0.04% 0.37% -0.16% -0.02% -0.34% -0.03%
GBP -0.37% 0.04% 0.45% -0.11% 0.03% -0.28% 0.01%
JPY -0.82% -0.37% -0.45% -0.57% -0.43% -0.75% -0.45%
BOOR -0.25% 0.16% 0.11% 0.57% 0.13% -0.18% 0.12%
AUD -0.39% 0.02% -0.03% 0.43% -0.13% -0.31% -0.02%
NZD -0.09% 0.34% 0.28% 0.75% 0.18% 0.31% 0.29%
CHF -0.38% 0.03% -0.01% 0.45% -0.12% 0.02% -0.29%

The heat map shows the percentage changes of the major currencies relative to each other. The base currency is selected from the left column and the quote currency from the top row. For example, if you select Australian Dollar from the left column and move along the horizontal line to US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).

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