Recently, I have been paying close attention to the performance of the Australian dollar. Honestly, the trend of this currency pair over the past two years is quite interesting. As the fifth-largest trading currency in the world, the Australian dollar has high liquidity and low spreads, so it should be very popular. However, in reality, it has remained weak over the past decade. From 2013 to now, the AUD/USD has fallen by over 35%, while the US dollar index has risen by more than 28% during the same period. The reasons behind this are quite worth pondering.

Why is the AUD so weak? The key reason is that it is a typical commodity currency. Australia's economy is highly dependent on exports of iron ore, coal, copper, and other bulk commodities. When global raw material prices fluctuate, the AUD exchange rate also changes dramatically. Moreover, the global trade environment has changed significantly over the past ten years, coupled with the US dollar remaining in a strong cycle, making it difficult for the AUD to gain momentum. Although the AUD is a high-yield currency that once attracted many arbitrage trades, the interest rate differential advantage has been diminishing in recent years.

By mid-2025, there was a turning point. Iron ore and gold prices surged, and the Federal Reserve began signaling rate cuts. The AUD once rose to 0.6636, hitting a new high since November 2024. But entering 2026, everyone is asking one question: Can the AUD continue to rise?

I believe the answer depends on several key factors. First is the stance of the Reserve Bank of Australia. Previously, the RBA had not cut rates due to inflation pressures, but recent easing in inflation data has provided room for future policy relaxation. In comparison, the policy direction of the Federal Reserve is also very important. If the US dollar remains strong, the upside for the AUD will be limited; conversely, if the dollar weakens, the AUD could benefit.

Another crucial factor is China's economy. China is Australia's largest trading partner, and its demand for iron ore, coal, and natural gas directly determines the outlook for Australian commodity exports. When China's economy recovers strongly, the AUD has support; but if China's real estate sector continues to languish, the AUD may lose momentum.

Regarding the AUD/CNY exchange rate forecast, opinions among different institutions vary. Morgan Stanley is relatively optimistic, expecting the AUD to rise to around 0.72; UBS is more conservative, estimating around 0.68; some analysts believe the rebound may be only temporary. The AUD/CNY trend mainly follows the AUD/USD, but since the RMB's fluctuations are relatively smaller, the decline might be slightly less. Currently, the AUD/CNY is oscillating within the 4.6–4.75 range. If the RMB weakens due to domestic economic pressures, this exchange rate could short-term rise toward 4.8.

From a technical perspective, the AUD/USD is currently fluctuating between 0.63 and 0.66. In the short term, if inflation data continues to be positive and the economy remains stable, the AUD may attempt to test above 0.66; conversely, if global risk sentiment deteriorates or the dollar rebounds, the AUD could fall back toward 0.63. In the medium term, the key factors are whether the Fed continues to cut rates and whether global trade tensions ease.

My personal view is that the AUD is currently in a stage of technical and fundamental tug-of-war. In the short term, it is advisable to trade within the range, and follow the trend if a breakout occurs. The medium- to long-term direction depends on the Fed's policy shifts and the global trade situation. If upcoming economic data continue to reinforce rate cut expectations, the AUD may have opportunities for long positions; otherwise, caution is needed regarding the pressure from a potential dollar rebound.

Forecasts for the AUD/CNY exchange rate involve multiple variables. Investors should closely monitor market sentiment before and after data releases and adjust their strategies flexibly. All foreign exchange trading carries risks and should be approached with caution.