AUD/USD up for fifth week: China gains tariff relief, Australia set to pay more

AUD/USD marks five consecutive weeks of gains

AUD/USD finished higher last week at 0.7084 (0.15%), marking a fifth consecutive week of gains for the first time since mid-2024. This rise was supported by a firm Australian labour market update, as the United States (US) eased into the weekend following the Supreme Court ruling against Trump's tariffs.

The January labour force report showed the Australian economy added 17,800 jobs, slightly below the 20,000 expected, cooling from a 68,500 gain in December. However, the unemployment rate stayed at a 12-month low of 4.1%, defying forecasts of a rise to 4.2%, while the participation rate remained stable at 66.7%. These figures reinforced observations of a still-tight labour market, strengthening the case for a follow-up Reserve Bank of Australia (RBA) interest rate hike.

Global impact of US tariffs and implications for Australia

On the international stage, Friday’s Supreme Court ruling that struck down President Trump's International Emergency Economic Powers Act (IEEPA) tariffs is seen positively for global growth, with China, the world’s second-largest economy, being a primary beneficiary.

Even after Trump's swift response, announcing a new 10% global tariff, quickly raised to 15% under Section 122 of the Trade Act of 1974, effective 24 February, the net tariff on Chinese goods remains lower than before the Court ruling. Estimates suggest that China will see a net reduction in tariffs of roughly 5 - 8 percentage points compared to the pre-ruling IEEPA peak.

While this development is good news for China, it is less favourable for Australia. Australia's effective US tariff rate on many of its exports is rising from 10% to 15% – a 50% increase – under the new temporary global surcharge announced by President Trump.

Looking ahead

Looking ahead, AUD/USD will be influenced by tariff-related headlines, broader risk sentiment, and the critical January consumer price index (CPI) release in Australia, previewed below.

Inflation rate (monthly CPI)

Date:  Wednesday, 25 February at 11.30am AEDT

Last December, inflation numbers showed a noticeable uptick in price pressures at the end of the year. Headline CPI rose by 3.8% year-over-year (YoY), up from 3.4% in November, exceeding market expectations of 3.6%. The trimmed mean, the RBA’s preferred underlying measure, climbed to 3.3% YoY, up from 3.2% prior.

With both measures firmly above the RBA's 2% – 3% target band, this data contributed to the central bank's decision to hike rates earlier this month and revise its inflation outlook higher, projecting underlying inflation to peak at 3.7% by mid-2026 before easing. The January inflation report is expected to show modest cooling, with headline inflation forecasted to ease to around 3.6% YoY and the trimmed mean to 3.2% YoY.

Evidence of moderation would allow the RBA to keep rates on hold in March and potentially May. However, if the trimmed mean prints at 3.3% YoY or higher – compounding last week’s firm labour force report – markets would likely reprice the probability of a March rate hike from the current 25% to 50%.

AU all groups CPI and trimmed mean chart

AUD/USD technical analysis

In last week’s update here, we noted that after AUD/USD hit a high of 0.7147, it was due for a period of consolidation, which has largely played out.

Looking ahead, we expect AUD/USD to continue consolidating its gains from the December 0.6419 low. A decisive break above resistance at 0.7150 – 0.7170 would indicate the correction is complete and could open the way for further gains towards 0.7500 in the medium term.

AUD/USD daily candlestick chart

• _{Source: TradingView. The figures stated are as of 23 February 2026 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.}