AUD/USD climbs ahead of RBA rate meeting on buoyant commodity prices and risk sentiment

AUD/USD rallies to multi-month high on GDP and spending data

AUD/USD finished strongly last week at 0.6641 (+0.65%), marking its highest weekly close since early September and extending its rally from the late November low of 0.6419.

The Australian dollar (AUD) drew solid support from the firmer details within last Wednesday’s third-quarter (Q3) gross domestic product (GDP) reading. Although headline GDP growth for the September quarter was a modest 0.4% quarter-on-quarter (QoQ), the underlying details were impressive.

Annual growth increased to 2.1% year-on-year (YoY), the fastest in two years, while domestic final demand rose by a robust 1.2% QoQ. This was followed on Thursday by strong household spending data, which increased by 1.3% month-on-month (MoM) in October for an annual growth rate of 5.6% YoY, the fastest since September 2023.

Interest rate expectations shift dramatically

Coming just a week after October’s hotter-than-expected inflation figures, these developments have resulted in the Australian interest rate market now pricing in a full 25 basis point (bp) hike by August 2026 and a total of 36 bp of Reserve Bank of Australia (RBA) rate hikes by December 2026.

This marks a significant change from just a few weeks ago when the Australian interest rate market was still pricing in RBA rate cuts in 2026 and brings into contrast the United States (US) scenario, where the Federal Reserve (Fed) is expected to cut rates further this Thursday.

Commodities and risk sentiment add fuel to the rally

Further boosting the AUD last week, global risk sentiment remained positive and key commodities were strong, best highlighted by copper futures, which rose by 2.72% last week for their highest weekly close on record. This is a positive development for Australia’s resource-rich export economy and AUD/USD.

Looking forward, the outcomes of Tuesday’s RBA interest rate meeting and Thursday’s Federal Open Market Committee (FOMC) meeting will be crucial in determining if AUD/USD can continue its ascent.

RBA interest rate decision

Date: Tuesday, 9 December at 2.30pm AEDT

At its last meeting in November, the RBA kept its official cash rate on hold at 3.60% as widely expected. The Board’s decision to keep rates on hold was unanimous and followed a pickup in underlying inflation during the September quarter, which exceeded both the RBA’s and the market’s forecasts.

In its quarterly Statement on Monetary Policy, which accompanied the decision, the RBA released updated forecasts. The bank revised higher its inflation forecasts, with trimmed mean inflation rising to 3.2% until mid-2026, only falling back to the 2.5% mid-point target in mid-2027.

This has been followed by a hotter-than-expected October inflation report, better-than-expected employment data, firmer components within last week’s Q3 GDP reading and robust household spending data for October.

This combination is expected to see the RBA keep rates on hold tomorrow at 3.60%. The RBA will be keen to keep all its options on the table for next year, with the phrase ‘data dependence’ expected to feature prominently.

RBA cash rate chart

AUD/USD technical analysis

After reaching a high of 0.6617 at the end of October, AUD/USD fell to a three-month low of 0.6419 on 21 November. That low was in the vicinity of the 0.6420 support zone, which has repeatedly held as a floor in AUD/USD since early August.

From that point, AUD/USD has mounted an impressive rally, climbing over 3.5% in just over two weeks. In the process, it has moved back above the 200-day moving average (MA) at 0.6473 and, more recently, broken above multi-month downtrend resistance originating from the February 2021 high of 0.8007, which corresponds to the 0.6600 level.

AUD/USD daily candlestick chart

While AUD/USD rally is now bordering on overbought territory, it is currently tackling its next upside challenge – the 200-week MA at 0.6643.

Above this level, the next resistance is the 0.6706 high from mid-September, followed by trend channel resistance around 0.6740. Beyond that lies a cluster of ambitious resistance targets at 0.6870 and 0.6940, which are probably more a story for 2026.

AUD/USD weekly candlestick chart

• _{Source: TradingView. The figures stated are as of 8 December 2025. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.}