Markets Await Australian GDP, AUD/USD Continues Recovery
The AUD/USD pair continued its recovery for the second consecutive session and traded around 0.7100 in Asian trading on Tuesday. This strengthening was primarily supported by the hawkish tone of Reserve Bank of Australia (RBA) Governor Michele Bullock, who signaled that the fight to reduce inflation is not yet over.
Bullock emphasized that the RBA board remains uncertain whether financial conditions are sufficiently “constrained” to bring inflation back to the midpoint of the target within a reasonable timeframe. She also highlighted indicators that still point to a tight labor market and said recent economic data generally supports the February interest rate hike decision (the cash rate is currently at 3.85%).
Domestically, housing data struck a more cautious tone: January 2026 building approvals fell 7.2% (m/m) to a 19-month low, and annualized dwelling permits fell 15.7%. The market now turns its attention to the fourth-quarter GDP release on Wednesday to assess the strength of Australia's economic momentum—a factor that could influence the RBA's next policy direction.
However, the AUD's potential for strengthening is likely to be restrained, as the US dollar remains solid amid risk aversion due to the escalation in the Middle East. Reports indicate that US President Donald Trump has said a "big wave" of attacks on Iran is still coming, while the US government has also urged its citizens to immediately leave several countries in the region due to serious security risks—situations that typically boost demand for safe-haven assets and put pressure on riskier currencies like the AUD. (asd)
Source: Newsmaker.id
