HSBC highlights that the Australian Dollar has been the top-performing G10 currency in early 2026, helped by the Reserve Bank of Australia’s February rate hike, a soft Dollar and strong commodity and equity markets. The bank argues that expectations of further rate increases and favourable structural fundamentals should keep the AUD supported, even if external tailwinds fade.

Domestic support underpins Australian Dollar

"The AUD has appreciated by more than 6.0% against the USD so far this year, outperforming other G10 currencies, with the NOK and NZD following closely behind (Bloomberg, 12 February). The AUD’s robust performance is largely attributed to the Reserve Bank of Australia’s (RBA) rate hike on 3 February − the first such move among G10 central banks in 2026."

"Additional momentum has come from external drivers, such as a soft USD and strong commodity and equity markets."

"Looking ahead, expectations of further rate increases, and Australia’s favourable structural fundamentals are likely to underpin continued AUD strength, even if external tailwinds subside."

"Notably, net inflows from portfolio investment and foreign direct investment (FDI) are more than sufficient to offset the current account deficit."

"Collectively, these factors suggest the AUD is well positioned for ongoing outperformance."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)