Aussie dollar extends rally for a fourth week ahead of key jobs data

Factors driving the Aussie dollar's rise

AUD/USD finished higher last week at 0.7073 (0.86%), marking a fourth consecutive week of gains that included a fresh three-and-a-half-year high at 0.7147.

Three main factors fuelled the Australian dollar's ascent:

1. Hawkish rhetoric from Reserve Bank of Australia (RBA) Deputy Governor Andrew Hauser, who emphasised that inflation remains uncomfortably high and the bank stands ready to tighten policy further if needed.
2. Volatility in precious metals receded following the recent flash crash. With gold finishing the week around a still elevated $5,000 per ounce and silver holding near $78.00, the calmer market helped soothe broader risk sentiment. This stability provided support for the commodity-linked Australian dollar, as a key exporter of these metals.
3. The United States (US) dollar softened broadly, pressured by a cooler-than-expected January inflation report on Friday. Headline consumer price index (CPI) fell to 2.4% year-over-year (YoY), its lowest level since May, while core CPI eased to 2.5%, its lowest since March 2021. Combined with softer retail sales data earlier in the week, this report largely offset the impact of a firmer non-farm payrolls print, reinforcing expectations for Federal Reserve (Fed) rate cuts.

What to watch in the week ahead

Looking ahead, trading volumes will likely be thinner this week due to the Presidents' Day long weekend in the US and Lunar New Year celebrations across Asia.

Locally, the key driver will be the Australian labour force report on Thursday, previewed below. Traders will also be closely monitoring US economic releases, including fourth quarter (Q4) 2025 gross domestic product (GDP) and flash purchasing managers' indices (PMIs), as well as shifts in risk sentiment and commodity price movements.

Labour force report

Date: Thursday, 19 February at 11.30am AEDT

fOR December, employment in Australia surged by 65,000, significantly exceeding the expected 30,000 gain. The unemployment rate fell to 4.1% from 4.3%, defying expectations of a rise to 4.4%, while the participation rate edged higher to 66.7%.

While December data is notoriously volatile, often influenced by seasonal factors like Christmas hiring, this labour force report nonetheless reinforced the RBA’s assessment of tight labour market conditions. It also validated feedback from RBA liaisons, who noted that a significant share of firms continues to struggle with sourcing labour. This tightness, alongside elevated and persistent inflation, prompted the RBA to raise rates by 25 basis points (bp) to 3.85% earlier this month.

This week's labour force update is expected to show a gain of 20,000 jobs, with the unemployment rate ticking up to 4.2% and the participation rate rising to 66.8%. Markets will be watching closely for confirmation of a cooler number after December's big surge.

However, should we see another red-hot jobs print, the market could pull forward the timing of the RBA’s next rate hike – currently about 75% priced for June – into May.

AU unemployment rate chart

AUD/USD technical analysis

In our AUD/USD update at the beginning of the month (read here), we outlined our view that the pullback from the 0.7094 high was likely a healthy correction, noting a strong band of support in the 0.6900 - 0.6800 zone. We further noted that provided AUD/USD remained above these support zones, a retest of the 0.7094 high was expected, with the potential to extend into the 0.7150 - 0.7200 area.

Having fallen just 3 pips short of this target zone last week at the 0.7147 high, we believe AUD/USD is now due for a period of consolidation. This phase may involve a retest of support near 0.6900.

However, we remain aware that if and when AUD/USD makes a decisive break above resistance at 0.7150 - 0.7170, it would indicate the correction is complete and clear the path for further gains, potentially targeting 0.7500 in the medium term.

AUD/USD daily candlestick chart

• _{Source: TradingView. The figures stated are as of 16 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.}