AUD to RMB exchange rate benefits! Can Australia's "interest rate hike" strategy last until 2026?

The Australian dollar has recently been on fire. At the end of December, AUD/USD surged to 0.6727, the highest point since October 2024. Moving into early 2025, the cumulative increase of the Australian dollar against the US dollar has exceeded 8.4%, directly refreshing the performance since the beginning of the year.

Interestingly, the strength of the Australian dollar is not only reflected in its performance against the US dollar; the AUD/CNY exchange rate has also risen along with it. The underlying logic is quite simple— the Reserve Bank of Australia and the Federal Reserve have shown some divergence in their “rate hike and cut” policies.

Australia is expected to raise interest rates, while the US is expected to cut

Recently, there are signs that inflation in Australia is rebounding. The December minutes of the central bank meeting revealed a hawkish tone, and the market generally expects the RBA to raise interest rates in 2026. In contrast, expectations for the Federal Reserve are still leaning towards a continued rate cut cycle, with industry forecasts predicting two rate cuts in 2026. This policy divergence has directly boosted the attractiveness of the Australian dollar.

More importantly, commodities have been taking off recently. Gold, silver, and copper have repeatedly hit record highs, and as a resource-exporting country, this is a huge positive for Australia. Rising commodity prices → increased export income for Australia → economic outlook improves → the Australian dollar becomes more valuable. This logical chain has been fully digested by the market.

What do banks think about the Australian dollar in 2026?

Deutsche Bank predicts that the interest rate differential advantage of the AUD within the G10 currency system will further expand. Their target is for AUD/USD to reach 0.69 in Q2 2026 and to surge to 0.71 by the end of the year.

The National Australia Bank is more aggressive, expecting the RBA to raise interest rates twice in 2026. Under this premise, AUD/USD could rise to 0.71 in Q2 and even reach 0.72 in Q3. In other words, there is still significant room for the Australian dollar to appreciate against the US dollar. This expectation will also benefit the AUD/CNY exchange rate.

The two most critical time points ahead

However, whether the Australian dollar can maintain this strong momentum depends on two upcoming major events. On January 28, Australia will release Q4 CPI data; on February 3, the RBA will announce its latest interest rate decision. These two data points will directly influence market expectations of the RBA’s rate hike, which in turn will determine whether the AUD and AUD/CNY exchange rate can continue their “appreciation show.”

From the current pace, expectations for the RBA to raise interest rates are already quite clear, and the market largely accepts this logic. The question is whether these expectations will be validated by the upcoming data. If both data points meet expectations, the upward momentum of the Australian dollar could be further strengthened.