The Australian dollar has weakened to 70 US cents as of September 2026, down from 72 US cents in June, driven by interest rate differentials.
Business & Markets Desk is a contributing writer covering business and public affairs for The Sydney Times.
The Australian dollar has weakened to 70 US cents as of September 2026, down from 72 US cents in June 2026. The currency weakness is driven by the interest rate differential between Australia and the United States, with the RBA holding the cash rate at 4.35 percent while the Federal Reserve maintains a higher rate. The AUD has underperformed major currencies throughout 2026, reflecting a market that has priced in a higher probability of further US tightening relative to Australia.
NAB forecasts that the Australian dollar will remain weak in the short term, with a target of 68 US cents by the end of 2026. The bank expects the RBA to cut rates in 2027 as inflation returns to target, which would provide some support for the AUD. However, the bank cautions that the AUD could fall further if the Federal Reserve continues to signal higher rates for longer.
Westpac forecasts that the Australian dollar will recover to 72 US cents by the end of 2026. The bank expects the Federal Reserve to cut rates in 2027, which would narrow the interest rate differential and support the AUD. The bank also expects the Australian economy to outperform expectations, which would provide support for the currency.
Commonwealth Bank forecasts that the Australian dollar will remain in a range of 68 to 72 US cents for the rest of 2026. The bank expects the RBA to hold rates steady until inflation is clearly on track to return to target, and expects the Federal Reserve to maintain its hawkish stance until the US economy shows signs of slowing.
The following factors will influence the Australian dollar in the coming months:
RBA interest rate decisions. The RBA's next move will be critical for the AUD's direction. A hold with a hawkish tilt would likely extend the currency's weakness, while a dovish surprise would be interpreted as a signal that the next move will be a cut.
Federal Reserve interest rate decisions. The Federal Reserve's next decision will also be important, as any shift in the US interest rate outlook will affect the global dollar index and therefore the AUD's trade-weighted value.
Chinese economic data. China is Australia's largest trading partner, and Chinese economic data has a significant impact on the Australian dollar. Strong Chinese economic data supports the AUD, while weak data weighs on the currency.
Commodity prices. Australia is a major exporter of commodities, including iron ore, coal, and natural gas. Commodity prices are denominated in US dollars, so a rise in commodity prices supports the AUD.
Inflation data. Australian inflation data will influence the RBA's interest rate decisions. Higher-than-expected inflation would support the AUD, as it would increase the probability of further rate hikes. Lower-than-expected inflation would weigh on the AUD, as it would increase the probability of rate cuts.
Exporters. A weaker AUD is beneficial for exporters, as it makes Australian goods and services more competitive in international markets. The resources sector is the primary beneficiary, because commodity prices are denominated in US dollars and Australian miners receive more Australian dollars for every dollar of revenue when the AUD is weak.
Importers. A weaker AUD is detrimental for importers, as it increases the cost of imported goods. The Australian Retail Council reported that retail spending reached $40.13 billion in July 2026, up 6.1 percent compared with the same month last year, but much of that growth was driven by price increases rather than volume growth.
Tourism. A weaker AUD is beneficial for the tourism sector, as it makes Australia a cheaper destination for international visitors. International visitor arrivals reached record levels in the first half of 2026, and a weaker AUD makes the destination even more attractive.
Education. A weaker AUD is beneficial for the education sector, as it makes studying in Australia more affordable for international students. Australian universities and vocational education providers are seeing increased demand from students in Asia and North America.
Households. A weaker AUD increases the cost of imported goods, including electronics, clothing, and household appliances, which feeds through to consumer prices and makes the RBA's inflation task harder. The impact is particularly acute for low-income households that spend a larger share of their income on imported goods.
The RBA's next meeting is in October 2026. The market is pricing in a hold, but there is some risk of a dovish surprise if the board signals that it is more concerned about the housing market than about inflation. The Federal Reserve's next meeting is in November 2026. The market is pricing in a hold, but there is growing speculation that the US economy is slowing faster than expected and that the Fed will be forced to cut rates in 2027.
More information about the Australian dollar is available at Reserve Bank of Australia and NAB Economics.
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