Sydney, Feb 13, 2026, 09:54 (AEDT)
- Renewed bets on another RBA rate hike are pushing the Australian dollar higher.
- When the currency gains strength, it can tamp down imported inflation, though exporters and investors with overseas holdings tend to feel the pinch.
- Focus stays on inflation numbers and what central banks signal about policy shifts—traders are lined up for the next move.
The Australian dollar surged to a new three-year high this week, clearing the 71 U.S. cent mark as markets factored in greater odds of another Reserve Bank of Australia rate hike. The currency advanced 0.7% to $0.7122, with analysts eyeing technical resistance at $0.7158, then $0.7282. Lending drove the move: mortgage borrowing spiked 9.5% last quarter, while investment loans hit all-time highs.
This isn’t just a story for currency traders. When the Aussie dollar climbs, import costs may ease, yet exporters can see their margins squeezed. There’s another wrinkle: returns on overseas investments can quietly slip, too.
This comes at a tricky time for policymakers. Inflation hasn’t settled below target, and rates are moving again. That puts the currency in the spotlight — it can slam the brakes on growth, sometimes more abruptly than central bankers expect.
RBA Governor Michele Bullock didn’t mince words before lawmakers, saying the bank stands ready to tighten policy if inflation proves sticky: “If we need to go up further because inflation is entrenched, the board will do so,” she said. The RBA bumped its cash rate up by 25 basis points to 3.85% last week, reacting to underlying inflation rising to 3.4% last quarter. Traders are currently pricing in roughly a 75% probability of a hike to 4.10% at the May meeting, pending first-quarter inflation data. Reuters
The short-term setup is looking overstretched—even for bullish traders. UOB’s Quek Ser Leang and Peter Chia pointed out that AUD/USD might still push toward 0.7150, though they cautioned that “upward momentum has not increased much.” Resistance sits at 0.7175. For now, they see 0.7055 as a key level; holding above it keeps the broader outlook constructive in the coming weeks. Mitrade
Some strategists are eyeing the Aussie dollar for a move into the mid-70s U.S. cents, according to a report in the Australian Financial Review, as investors ramp up bets on more RBA tightening. Still, the same report points out, there are warnings that the push higher could run into its own hurdles.
The dollar’s barely budged. Traders, stuck with a batch of mixed U.S. data, are holding out for Friday’s inflation print. The dollar index? Still hovering near 96.93.
The New Zealand dollar hovered near $0.6059, with traders eyeing the Reserve Bank of New Zealand’s meeting set for next week. Consensus is for the central bank to hold steady at 2.25% following an extended period of rate cuts. Westpac’s chief New Zealand economist, Kelly Eckhold, noted, “Hence, we have revised up our view of how quickly the RBNZ will lift the OCR over 2027,” pointing to a faster pace of official cash rate hikes. NST Online
Australian investors face a less obvious headwind when the Australian dollar surges. Even if U.S. dollar-denominated global shares rally, gains can look smaller once converted back to Australian dollars—unless, of course, that currency risk is hedged.
The rally faces two potential stumbling blocks. If inflation data comes in weaker, that could cool enthusiasm for another RBA hike. On the flip side, a sudden bounce in the U.S. dollar would pressure AUD/USD. Technically, the pair is also bumping up against resistance, adding to the pullback risk.
