FX.co ★ Australian Dollar Set for Weekly Gains

The Australian dollar held firm around $0.72 on Friday and was on track for a weekly gain, as investors positioned ahead of next week’s Reserve Bank of Australia policy meeting. Markets are pricing in a 25 bps rate hike on May 5, which would mark a third consecutive increase and lift the cash rate to 4.35%. There is also growing speculation that rates could reach 4.60% or higher by year-end, with inflation pressures still a major concern following the closure of the Strait of Hormuz, which has disrupted global supply chains.

Australia’s annual inflation rate accelerated to 4.6% in March, well above the RBA’s 2–3% target band and the highest reading since the introduction of monthly CPI data in 2025. In contrast, recent activity data have been more mixed: the manufacturing PMI rose to 51.3 in April, beating both the flash estimate of 51 and March’s 49.8, signaling a return to modest expansion. However, producer prices for final demand increased by just 0.4% quarter-on-quarter in Q1 2026, down from a 0.8% rise in the previous quarter and below market forecasts for a 0.9% gain.