Consensus projections for the next four quarters, compiled from leading investment banks.
Access the full forecast →
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The Australian dollar has surged to a three-year high as investors price in renewed Reserve Bank of Australia tightening and ride a strengthening Chinese yuan, a powerful combination for the Asia-linked currency.
AUD/USD climbed to 0.7128, its highest level in three years, while GBP/AUD fell to 1.9170, the lowest level in 18 months.
Momentum behind the rally reflects growing conviction that the Reserve Bank of Australia is pivoting back toward rate hikes.
That conviction was reinforced by comments from RBA Deputy Governor Andrew Hauser, who struck a distinctly hawkish tone in remarks delivered Wednesday.
Hauser said he had been surprised to the upside by resurgent domestic demand, suggesting financial conditions may not have been as restrictive as policymakers had assumed.
Further tightening would widen Australia’s interest rate advantage over peers, reinforcing demand via the carry trade, where investors favour higher-yielding currencies.
However, monetary policy is only part of the story.
The Australian dollar is positively correlated with China’s offshore yuan because of Australia’s trade exposure and regional linkages.
“A bullish CNH outlook radiates out to the rest of the region,” says RBC Capital Markets in a February 10 FX strategy update.
Above: CNH strength (USD/CNH in top panel) correlates with AUD strength (USD/AUD in lower panel).
“China can afford to guide the yuan a few more percentage points stronger,” the bank adds.
RBC is bullish on the Australian dollar in 2026, citing superior carry dynamics, a supportive Asian growth cycle, constructive metal prices and strengthening domestic momentum.
The bank also argues that Beijing may welcome further yuan strength as it supports the longer-term goal of currency internationalisation.
Consensus projections for the next four quarters, compiled from leading investment banks.
Access the full forecast →
