Skip to Content
News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.



Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events


Economic Calendar

Economic Calendar Events

Free Trading Guides
Please try again
More View More
Australian Dollar Outlook: US Dollar, RBA, Fed. Is AUD/USD Sidelined?

Australian Dollar Outlook: US Dollar, RBA, Fed. Is AUD/USD Sidelined?

Daniel McCarthy, Strategist
Please add a description for the image.


  • The Australian Dollar refuses to lie down as growth sentiment sways
  • The spread of new Covid variants weigh, but green shoots might be appearing
  • Iron ore and commodity markets appear to be recalibrating. Will AUD/USD rise?
How to Trade AUD/USD
How to Trade AUD/USD
Recommended by Daniel McCarthy
How to Trade AUD/USD
Get My Guide

The Australian Dollar finished last week testing the November 2020 lows of 0.69913. This week it has bounced back as positive risk sentiment returned. It also appears that some positioning unwinding may have occurred after the RBA meeting on Tuesday.

The spread of the Omicron variant of Covid-19 had been weighing on markets due to the uncertainty of how transmissible it is and the impact on human health compared to previous strains.

Early indications appear to point toward a highly transmissible strain that may not lead to as many hospitalisations as previous variants. This perspective is yet to be verified.

In any case, market reaction has been that of less concern for the economic impacts than it had been previously.

The RBA left monetary policy unchanged on Tuesday as expected. The tone in the post meeting statement reflected patience on the board’s behalf, as the bank does not face the same inflationary pressures that many other central banks are experiencing.

This leaves the RBA with scope to maintain their current monetary policy stance until their next meeting in February 2022.

The market had been expecting this relatively dovish stance and it appears that it may have been caught short. The latest CFTC data shows speculative positions in AUD/USD to be skewed this way.

There was also some growth positive news from China as the PBOC cut the reserve ratio requirement (RRR) for banks by 50 basis points. This has seen the iron ore price edge up this week.

A key driver of AUD/USD is the US Dollar and next week there will the Federal Open Market Committee meeting (FOMC). This has the potential to be significant market mover for the Aussie.

Since the last FOMC, the Fed has turned remarkedly hawkish in their commentary. There are high expectations for an acceleration in the pace of tapering and for rate hikes in the US next year. Should expectations not be met, volatility might increase again.

Looking ahead for the Aussie, next week will see business and consumer confidence numbers early in the week before the unemployment data on Thursday.


Chart created in TradingView

Trading Forex News: The Strategy
Trading Forex News: The Strategy
Recommended by Daniel McCarthy
Trading Forex News: The Strategy
Get My Guide

--- Written by Daniel McCarthy, Strategist for

To contact Daniel, use the comments section below or @DanMcCathyFX on Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.