AUD/USD Hinges on Domestic Data and RBA Signals Amid Volatile Commodity Prices
The Australian dollar's near-term direction is influenced by domestic economic releases and signals from the Reserve Bank of Australia (RBA). The RBA has maintained a cautious stance, keeping the cash rate at 4.10% since its last adjustment in late 2025. Governor Sarah Hunter emphasized that policy decisions will remain data-dependent, focusing on underlying inflation and wage growth.
The upcoming Consumer Price Index (CPI) indicator is expected to provide clues on whether inflationary pressures are cooling enough for the RBA to consider rate cuts later this year. A weaker-than-expected CPI reading could reinforce bets on a rate cut as soon as May, weighing on the AUD. Conversely, strong employment figures could prompt the RBA to maintain its hawkish tilt, supporting the currency.
The AUD remains sensitive to shifts in the US dollar and global commodity prices, particularly iron ore prices which have been volatile in recent weeks, trading around $110 per tonne as of early March. A sustained recovery in commodity prices could provide an additional tailwind for the Australian dollar.