Aussie under pressure as RBA rate-hike cycle seen nearing end

The Australian dollar is under pressure after weak Chinese and domestic labour data, with analysts warning the RBA rate-hiking cycle may be over, removing a key support for the currency.

The Aussie climbed to 0.726 against the US dollar last week, its strongest level in four years, before a run of discouraging data began to chip away at the advance. Weak Chinese economic readings at the start of the week delivered the first blow. Then, on Thursday Australian time, domestic labour data came in softer than expected, reinforcing the view that the economy is slowing. Analysts now question whether the Reserve Bank of Australia has finished raising interest rates altogether, which would remove a key pillar of support for the currency.

For foreign exchange and currency traders, the end of the RBA's rate-hiking cycle would narrow the interest rate differential between Australia and other major economies, reducing the appeal of carry trades that have supported the Aussie. A weaker Australian dollar could also reflect broader risk aversion in global markets, as China's economic slowdown weighs on commodity prices and demand for Australian exports. Traders can check NowPrice's fx page for real-time pricing on AUD/USD and related crosses.

Looking ahead, the focus will be on upcoming Australian inflation data and any further signals from the RBA. A softer inflation print could cement expectations of a pause or even a rate cut, putting additional pressure on the Aussie. On the other hand, any surprise strength in the economy or hawkish comments from the RBA could provide a temporary reprieve. Global risk sentiment and Chinese data will also remain key drivers for the currency.