FX.co ★ Australian Dollar Starts 2026 Strong

The Australian dollar strengthened to approximately $0.669 on Friday, marking a near 14-month high and beginning the new year on a positive note. This appreciation comes as investors anticipate the release of the monthly inflation data next week, which may impact the Reserve Bank of Australia's (RBA) policy decisions after it suggested a potential interest rate increase this year. The minutes from the RBA's December meeting reveal that policymakers are ready to implement tighter monetary policy should inflation not decline as expected. All eyes will be on the fourth-quarter Consumer Price Index (CPI) report, scheduled for release on January 28; a higher-than-anticipated core inflation figure might trigger action at the RBA's meeting on February 3. Furthermore, positive sentiment is bolstered by recent figures showing that December's manufacturing activity remained at its peak for the past three months. The Australian dollar also benefited from a generally weaker US dollar, amid concerns regarding the Federal Reserve's autonomy during the Trump administration. The Australian dollar concluded the year 2025 with significant strength, achieving a gain of nearly 8%, marking its best annual performance since 2020.