The Australian dollar held firm on Monday, trading near recent highs as improving global risk sentiment and steady commodity prices helped support the currency. Market optimism surrounding interest rate trajectories in major economies has also played a role in lifting demand for risk-linked assets like the Aussie.
The AUD hovered around $0.6620, maintaining last week’s gains as equities rebounded and investors grew more confident about the outlook for global growth. A softening U.S. dollar, triggered by cooling inflation data and speculation of an earlier-than-expected rate cut by the Federal Reserve, provided further tailwinds.
AUD/USD 1-D Chart as of April 14th, 2025 (Source: TradingView)
Stronger-than-expected Chinese trade data also contributed to the upbeat tone, reinforcing hopes of a recovery in Australia’s largest export market. Iron ore and other key Australian exports posted modest gains, adding to the positive momentum in the currency.
Meanwhile, traders are closely monitoring the Reserve Bank of Australia’s stance after its recent decision to keep rates on hold. While the RBA has maintained a cautious tone, the possibility of future hikes remains on the table if inflation proves stubborn. Interest rate differentials between Australia and the U.S. could narrow further, which may lend support to the Aussie in the medium term.
Risk sentiment was also buoyed by easing geopolitical tensions, prompting investors to rotate back into higher-yielding currencies. The improved appetite for risk has benefitted not just the AUD but also other growth-sensitive currencies across the Asia-Pacific region.
Although volatility may persist ahead of key economic data releases this week, analysts say the Australian dollar remains well-positioned, especially if global growth prospects continue to firm and the Fed adopts a more dovish posture.
