Aussie dollar rises on commodities and US-China optimism

The Australian dollar rose above $0.62 on Monday, reversing a two-day decline as firmer commodity prices and an overall risk-on sentiment provided support.

Aussie dollar rises on commodities and US-China optimism

The Aussie also benefited from a pullback in the US dollar ahead of Donald Trump’s inauguration, as investors awaited more clarity on his potential policies, particularly regarding tariffs and trade. Additionally, a positive phone conversation between Trump and Chinese President Xi Jinping on Friday fueled hopes of reduced US-China tensions, providing further support for risk-sensitive currencies like the Australian dollar. On the domestic front, traders are closely eyeing next week’s quarterly inflation report, which could offer valuable insights into the future direction of Australian interest rates.

Speculation grows for RBA rate cuts, impacting Aussie dollar

There is growing speculation that the Reserve Bank of Australia may begin cutting rates as early as next month, depending on the inflation outlook and broader economic conditions. Such a move would likely influence the Australian dollar's performance in the coming months, particularly if global risk sentiment remains positive.