Recently observing the Australian dollar trend, I found an interesting phenomenon: over the past twenty years, the "high points" of the Australian dollar have been getting lower and lower. Starting from a high near 1.05 in early 2013, now in mid-2026, the AUD/USD has depreciated by over 35%. What exactly has happened behind this?

Actually, the weakness of the Australian dollar is largely not due to problems with the AUD itself, but because the US dollar is too strong. The past decade has coincided with a strong dollar cycle, during which major currencies like the euro, yen, and Canadian dollar also depreciated against the dollar. The AUD is just one of the victims. But there are also several structural reasons why the AUD is particularly weak.

The AUD has long been regarded as a high-yield currency, attracting interest from carry trades. In the past, Australian interest rates were significantly higher than those in the US, leading to large capital inflows. Currently, the Reserve Bank of Australia’s cash rate is about 4%, and the gap with the US is not as wide, which has indeed softened this attractiveness. Additionally, Australia’s export structure is highly concentrated in iron ore, coal, and energy, with China as the largest buyer. In recent years, China’s economic data has been less than expected, raw material demand has declined, which has also impacted the AUD’s status as a commodity currency.

Regarding the long-term comparison of the AUD and TWD trends, the AUD is more like a commodity currency driven by global macro factors, while the TWD is relatively more influenced by Taiwan’s tech exports and regional economic conditions. Over a 20-year cycle, the volatility of the AUD is actually more affected by commodity prices and interest rate differentials.

Will the AUD rebound? I believe the key depends on three factors simultaneously aligning: the RBA maintaining a relatively hawkish stance, a substantial improvement in Chinese demand, and the US dollar entering a structural weakening phase. Currently, only one or two of these are in place; therefore, the AUD is more likely to remain in a range-bound oscillation rather than a one-sided rally.

Major institutions in the market have differing views on the AUD. Optimists believe that if the US economy soft-lands and the dollar index declines, commodity currencies will benefit, with Deutsche Bank even seeing a target of 0.76. Pessimists worry about slowing global economic growth and changes in interest rate differentials, thinking the upside for the AUD is limited.

My personal observation is that rather than trying to precisely predict the AUD’s movement, it’s better to treat it as a commodity currency oscillating within a range, focusing on entry and exit points at the boundaries and risk management. Due to its high liquidity and relatively regular volatility, medium- to long-term trend judgment is actually quite manageable. Short-term pressures mainly come from policy changes by the RBA and Fed, while long-term bullishness depends on the recovery of Australia’s resource exports and commodity cycles.