Aussie Dollar Speeds to 69 Cents—Will the RBA Raise Interest Rates Again?
The Australian dollar (AUD) traded around US$0.691 on Tuesday (January 27, 2026), approaching its strongest level since early 2023. This increase was largely supported by "yield appeal," as investors view Australia as offering increasingly attractive bond returns compared to some other countries.
The main driver came from the bond market. The yield on the 3-year Australian government bond—which is typically the most sensitive to interest rate trends—rose and is said to be at its highest level since November 2023. The combination of Australia's strong credit rating reputation and hawkish central bank expectations makes AUD assets more attractive to global investors.
Domestic labor data further bolstered this narrative. The latest report showed the unemployment rate fell to 4.1% in December, the lowest in seven months, while job gains far exceeded market expectations. These figures have led some market participants to believe that demand pressures in the economy remain quite strong, increasing the likelihood of tighter monetary policy.
The next focus shifts to inflation data, which will be released on Wednesday, January 28, 2026. Investors will be monitoring the December monthly CPI and, in particular, the fourth-quarter trimmed mean, as this measure is often used to read "core" price pressures, stripping out extreme component fluctuations.
The market expects December monthly inflation to rise after previously remaining stagnant, while the fourth-quarter trimmed mean is predicted to slow slightly. If inflation turns out to be hotter than expected, expectations of a "more hawkish RBA" could strengthen—and that typically helps keep the AUD strong. However, if inflation cools more quickly, the AUD risks losing steam as the market begins to reduce bets on interest rate hikes. (az)
Source: Newsmaker.id
