**AUD/USD Outlook Strengthened by RBA’s Hawkish Hold as Rate Hike Risks Return**
*Based on the article by Kenny Fisher at Forex Crunch (original: [Here](https://www.forexcrunch.com/blog/2026/01/02/aud-usd-outlook-buoyed-by-hawkish-rba-hold-as-rate-hike-risks-re-emerge/)), with additional insights.*
The Australian dollar (AUD) has recently experienced a resurgence against the US dollar (USD), primarily driven by a renewed sense of optimism surrounding the Reserve Bank of Australia’s (RBA) policy direction. After a period of rate pause, the RBA’s hawkish tone has revived speculation that more interest rate hikes could be on the horizon. This development takes place against a backdrop of evolving economic circumstances, both within Australia and globally, as central banks continue to navigate the post-pandemic inflation challenge.
**Recap: AUD/USD’s Recent Performance**
Over the course of 2023 and into early 2024, the AUD/USD currency pair faced significant volatility. In 2023, global financial markets saw a mix of optimism and uncertainty as inflation levels and central bank responses varied across regions. The Australian dollar has, at times, suffered from risk-off sentiment, with declines driven by weaker data out of China (Australia’s largest trading partner), fluctuating commodity prices, and dovish expectations regarding monetary policy.
By late 2023, as US inflation began to moderate and the Federal Reserve signaled a possible end to its tightening cycle, the US dollar lost some of its upward momentum. The focus then shifted to other central banks, particularly the RBA, and whether it would pause, cut, or resume raising rates in response to persistent inflation.
**Key Drivers Behind AUD/USD’s Recent Moves**
The AUD/USD has been heavily influenced by several interconnected factors:
– **RBA Policy and Tone**: The RBA’s decision to hold rates, while maintaining a hawkish bias, boosted the Australian dollar. The central bank kept the cash rate unchanged at 4.35 percent but stressed that inflation remains uncomfortably high, suggesting that further tightening is possible should inflation prove more persistent than expected.
– **Market Rate Expectations**: Traders responded by pricing in an increased probability of another rate hike in 2024, in contrast to other major central banks that have started to hint toward rate cuts.
– **Economic Data**: Stronger-than-expected inflation and labor market data in Australia have reinforced the RBA’s cautious stance and the possibility of further hikes.
– **Global Developments**: Fluctuations in commodity markets, notably iron ore and coal, and geopolitical concerns have added layers of complexity to the outlook.
**The RBA’s Hawkish Hold: What Has Changed?**
The RBA’s most recent policy statement marked a clear shift in tone from earlier meetings. Several key remarks signaled the central bank’s willingness to do more if warranted
Read more on AUD/USD trading.