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News
Tuesday, January 27, 2026
What’s happening: The Australian dollar gained versus the US dollar on Tuesday, inching toward its highest mark since January 2023.
What happened: Growing appeal of Australian government bond yields provided a boost to the AUD/USD.
Weakness in the US dollar lent further support to the forex pair.
Why it matters: There has been rising demand for Australian government bond yields, driven by growing investor confidence in the nation’s top-tier credit rating and the Reserve Bank of Australia’s hawkish monetary-policy outlook. This sent the policy-sensitive three-year bonds to their strongest mark since November 2023.
Markets increased speculations of a rate hike by the RBA after the unemployment rate declined to a seven-month low in December. The Australian Bureau of Statistics reported that the nation’s jobless rate eased to 4.1%, from the previous month’s 4.3%. This marked the lowest reading since May 2025 and came in much better than expectations of 4.4%.
Data released this morning showed Australia’s NAB business confidence index rose to 3 in December from 2 in the previous month. Meanwhile, business conditions improved further, amid gains in both sales and profits, while the employment level remained steady.
The AUD/USD also received support from weakness in the US dollar, amid concerns over the Federal Reserve’s independence and another government shutdown. The US dollar has been under pressure due to speculations of President Donald Trump replacing Fed chief Jerome Powell with a dovish successor.
The US dollar index, which measures the greenback’s performance versus a basket of major peers, fell around 0.1% to 96.99 this morning.
The AUD/USD rose 0.2% to 0.6926 this morning, while the S&P/ASX 200 surged 0.97% to trade at 8,945.70 amid strength in materials shares.
What to watch: Investors now await the release of key inflation report (0430 UAE Time), due to be released on Wednesday, with the trimmed mean measure of the CPI viewed as the preferred measure of price pressures by the RBA.
Australia’s annual inflation, which eased to 3.4% in November from 3.8% in the previous month, is expected to rise to 3.6% in December. Analysts expect the trimmed mean CPI to rise to 3.2% in the fourth quarter from 3% in the previous quarter.
Context: Equity markets started the week on a positive note as investors digested the latest economic data.
Details: Data released on Monday showed US durable goods orders surged 5.3% in November, recovering from a 2.1% decline in the previous month. The figure also topped market estimates of a 3.7% gain.
The Chicago Fed National Activity Index climbed to -0.04 in November from -0.42 in the previous month, which was the weakest reading in 10 months. This indicated an improvement in economic growth.
Gains in stocks were driven by information technology and communication services stocks, with shares of Meta, Apple and Microsoft closing higher ahead of their earnings results this week. Consumer discretionary stocks lagged, with Tesla’s shares closing lower by more than 3%.
Trump is expected to replace Fed chief Jerome Powell as soon as by the end of this week with a dovish successor. Investors also monitored ongoing trade uncertainty after the US President reiterated his plans to impose 100% tariffs on Canadian imports.
There was a lull in Trump’s persistence in wanting Greenland, despite the White House posting a picture of the US President taking a penguin for a walk in the snow and social media quickly pointing out that this flightless bird lives only in the southern hemisphere.
The Dow Jones index jumped 313.69 points, or 0.64%, to close at 49,412.40 on Monday, while the S&P 500 added 0.50% to reach 6,950.23 and the Nasdaq 100 climbed 0.42% to settle at 25,713.21.
What to watch: Investors await the release of economic data on S&P/Case-Shiller home price (1800 UAE Time), CB consumer confidence (1900 UAE Time) and Richmond Fed manufacturing index (1900 UAE Time) today.
The Case-Shiller home price index, which climbed 1.3% year-over-year in October, is expected to rise by 1.2% in November. Analysts expect the consumer confidence index to rise to 90.9 in January from the previous reading of 89.1, while the Federal Reserve’s Fifth District manufacturing index is projected to decline to -8 in January from -7 in the previous month.
Other Markets: European indices closed mostly higher on Monday, with the FTSE 100, DAX 40 and STOXX Europe 600 Index up by 0.05%, 0.13% and 0.20%, respectively, and the CAC 40 down by 0.15%.
Ukraine’s military hit Russia’s Slavyansk Eko oil refinery in the Krasnodar region. The news sent the USD/RUB pair higher in forex trading this morning.
The Philippines’ trade deficit shrank to $3.52 billion in December from $4.15 billion in the year-ago month, which exerted pressure on the USD/PHP forex pair.
Ireland’s Credit Union Consumer Sentiment Index surged to 64.7 in January from 61.2 in the previous month. Consumer mood hitting the highest level since March 2025 sent the EUR/USD pair higher in forex trading this morning.
US President Donald Trump announced plans to increase tariffs on products from South Korea from 15% to 25%, exerting pressure on the USD/KRW forex pair.
Chinese industrial firms’ profits grew by 0.6% year-over-year to 7.40 billion yuan in 2025, compared to 0.1% growth during the first eleven months of the year. However, the USD/CNY pair rose in forex trading this morning.
Spain’s unemployment rate (1200 UAE Time), Brazil’s IPCA mid-month CPI (1600 UAE Time), Mexico’s balance of trade (1600 UAE Time), US ADP employment change weekly (1715 UAE Time), Redbook index (1755 UAE Time), FHFA house price index (1800 UAE Time), Richmond Fed manufacturing shipments index (1900 UAE Time), Richmond Fed services revenues index (1900 UAE Time), Dallas Fed services index (1930 UAE Time), Dallas Fed services revenues index (1930 UAE Time), and money supply (2200 UAE Time) as well as Canada’s wholesale sales (1730 UAE Time).
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