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    Australian dollar strengthens due to rising commodity prices and global growth optimism

    by VT Markets
    /
    Jan 28, 2026
    The Australian Dollar has risen in value due to positive feelings about global growth and higher commodity prices. Recent inflation data from Australia has sparked expectations of a possible interest rate hike by the RBA in February. Commodity prices have played a big role in the Australian Dollar’s strength. The latest Consumer Price Index (CPI) report showed a surprising rise in headline inflation to 3.8% in December, moving away from the RBA’s target.

    Looking Back at Early 2025 Trends

    Last year, in early 2025, strong inflation data and increasing commodity prices supported a positive outlook for the Australian Dollar. The market prepared for a rate hike by the Reserve Bank of Australia, which did occur in February. Now, in January 2026, we are experiencing a similar situation, bringing back memories of that time. The most recent inflation figures for the fourth quarter of 2025 showed a rate of 3.5%, still above the RBA’s target range. While the central bank has kept the cash rate steady at 4.85% for six months, the market now sees over a 50% chance of another increase by April. Traders might consider buying call options on the AUD/USD set to expire in March to take advantage of potential gains from an anticipated hawkish statement from the RBA next week. This movement is supported by a recent rise in commodity prices, with iron ore bouncing back to over $135 per tonne. This situation resembles what we saw in early 2025 and underpins the currency’s value. Using a bull call spread could be a smart way to profit from expected AUD gains led by these commodity trends.

    Uncertain Global Growth

    However, the outlook for global growth isn’t as clear as it was a year ago. Recent manufacturing PMI data from China, a crucial trading partner, has shown weakness and is barely above the 50 mark indicating growth. Because of this uncertainty, anyone holding long AUD positions should consider using put options or setting strict stop-loss levels to protect against a potential downturn in global sentiment. Create your live VT Markets account and start trading now.

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