The AUD/USD has risen to nearly 0.6680, as the Australian Dollar performs better than many other currencies. This comes after the Reserve Bank of Australia (RBA) shared the minutes from their recent monetary policy meeting, where they kept the Official Cash Rate steady at 3.6%.
The RBA’s minutes showed that they are considering possible interest rate hikes by 2026 due to rising inflation risks. Currently, there is a 27% chance of a rate hike in February, with a complete hike expected by June next year. There’s also a 56% chance of further action by the end of 2026.
Factors Impacting Currency Performance
A weaker US Dollar is also supporting the Australian Dollar, with the US Dollar Index down 0.16%. The expectation that the Federal Reserve may lower rates in 2026, with a 73.8% chance of at least a 50 basis point cut next year, adds to this decline.
Market attention is now on the upcoming US Q3 GDP data, set to be released at 13:30 GMT. This data gives insight into the country’s economic health. The US Bureau of Economic Analysis publishes GDP growth figures quarterly, with the first estimate having the strongest impact on the market. If the GDP data surprises positively, it can strengthen the US Dollar; if it’s disappointing, it can weaken it.
The Reserve Bank of Australia is hinting at rate hikes for 2026, while the Federal Reserve is likely to cut rates. This difference in policies is expected to help the AUD/USD rise in the coming weeks, favoring the Australian Dollar over the US Dollar.
This RBA hawkishness is influenced by Australia’s inflation, which was last reported at 5.4% for Q3 2025—well above the central bank’s target range. In contrast, the US’s latest inflation data for November 2025 has cooled to 3.1%, which supports the case for future rate cuts. This economic backdrop is a strong foundation for a stronger AUD against a weaker USD.
Strategic Investment Outlook
Given this scenario, it may be a good idea to buy AUD/USD call options to profit from the expected rise. Selecting an expiration date in February or March 2026 would give the trend time to develop, with strike prices above 0.6700 as a sensible target. This strategy provides a way to express a bullish view on the pair with defined risks.
However, caution is needed with the preliminary US Q3 GDP data being released today. The market expects a reading around 2.1%, and a surprisingly strong number could cause a temporary rebound in the US dollar. This could lead to a brief drop in the AUD/USD, creating a better entry point to consider.
We have seen this trend before, particularly during the recovery after 2009 when the RBA’s rate hikes outpaced those of the Fed, leading to a sustained strengthening of the Australian dollar. This history suggests that the current trend could maintain momentum if economic data from both countries continues on its current path.
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