Australian Dollar to Chinese Yuan relationship overview: How to grasp the turning point of AUD/USD in 2026?

The AUD/USD outlook for 2025 has surprised investors—with a cumulative increase of 7%. The driving forces behind this are not due to a single factor but result from a combination of tariff policy adjustments, a phased weakening of the US dollar, and the resilience of the Australian local economy.

So the question is: Will the Australian dollar continue to strengthen in 2026? This directly relates to the performance of the AUD/CNY exchange rate, as the relative strength of the RMB against the USD will also influence the value of the AUD against the CNY.

RBA Attitude Shift: From Rate Cuts to Hold or Rate Hikes

Entering 2026, Australia’s inflation pressures are gradually emerging, leading to a clear change in the Reserve Bank of Australia’s policy stance. The market consensus is: the rate-cutting cycle has ended, and the focus now is on whether rate hikes will actually occur.

Major institutions’ forecasts vary:

• Westpac expects the RBA to remain on hold throughout the year
• Commonwealth Bank anticipates one rate hike window
• National Australia Bank and Citibank are more optimistic about rate hikes, expecting one in February and another in May

Compared to the Federal Reserve, the market generally expects two more rate cuts in 2026, though JPMorgan is more cautious, expecting only one.

This policy divergence is actually favorable for the AUD/USD—when the RBA maintains high interest rates or hikes further while the Fed continues to ease, the interest rate differential will naturally support a stronger AUD.

Economic Fundamentals: Growth Expectations Improve, but China Factors as a Variable

Australia’s economy in 2025 performed steadily: GDP growth was better than last year, and the unemployment rate remained stable. In 2026, OECD’s forecasts are more optimistic—supported by the recovery in household disposable income, Australia’s GDP growth is expected to reach 2.3%, further improving from 2025.

However, there is a hidden risk worth noting: Australia’s economy is highly dependent on commodity exports, with China being its largest trading partner. If China’s economic growth slows unexpectedly in 2026, Australian exports and economic growth could face pressure, which would in turn drag down the AUD. This would also indirectly affect the AUD/CNY exchange rate.

Geopolitics: US-China Tensions Are the Real “Black Swan”

As a typical risk asset, the AUD is extremely sensitive to changes in global risk appetite. As risk aversion rises, the AUD tends to be sold off.

The biggest uncertainty in 2026 is: will the Trump administration escalate trade tensions again? Will the Middle East situation worsen further? If these geopolitical conflicts occur, they could cause a significant decline in global risk appetite, leading to a correction in AUD/USD.

How Do Institutions View the AUD in 2026?

Despite these risks, mainstream institutions generally remain bullish on the AUD:

• JPMorgan expects AUD/USD to be around 0.67 in Q1, rising to 0.68 by year-end
• Deutsche Bank is more optimistic, forecasting 0.69 in Q2 and reaching 0.71 by year-end
• National Australia Bank is the most aggressive, expecting Q2 at 0.71 and Q3 further up to 0.72

Deutsche Bank specifically notes that the interest rate differential advantage of the AUD among G10 currencies will further expand, which is a core logic supporting the medium-term strength of the AUD.

In summary, the outlook for AUD/USD in 2026 does have upside potential, but investors need to closely monitor three key variables: divergence in central bank policies, China’s economic trajectory, and US-China trade tensions. The interaction of these factors will also influence the AUD/CNY exchange rate—particularly when AUD/USD rises while the RMB remains relatively stable, the AUD against the CNY may also trend upward.