AUD Rally: Fueled by RBA Hawkishness and China's Historic Streak

The Australian Dollar (AUD) has emerged as the clear outperformer in the G10 FX space this week, buoyed by a “perfect storm” of positive domestic data, hawkish central bank rhetoric, and euphoric sentiment from its largest trading partner.

China's 14-Day winning Streak

Sentiment in the Asia-Pacific region is being lifted by an unprecedented run in Chinese equities. The Shanghai Composite has recorded 14 consecutive days of gains—the longest winning streak since the index's inception in 1993.

Investors are front-running expectations of significant stimulus, with rumors of a generic Reserve Requirement Ratio (RRR) cut swirling ahead of the March National People's Congress. This heavy buying of Chinese assets has spilt over into proxy currencies, providing a strong tailwind for the Aussie Dollar despite broader global concerns.

RBA: “No Cuts Anytime Soon”

Domestically, the Reserve Bank of Australia (RBA) continues to stand apart from its dovish global peers. Deputy Governor Andrew Hauser explicitly stated on Thursday that “rate cuts are unlikely anytime soon,” citing inflation persistence.

Validation for this stance came via impressive data:

Forex Implications

The divergence is clear: while the Fed and ECB are in easing cycles (or priced for them), the RBA remains on hold with a tightening bias.