🏦🇺🇸🇦🇺 RBA-Fed Pricing Gap Supports AUD Higher: Cable FX Macro

• RBA pricing has shifted upward significantly (from expected cuts to expected rises), while Fed pricing has shifted sideways or slightly higher (fewer/delayed cuts than anticipated at the start of 2026). Markets price zero to one Fed 25bp cut in 2026, often pushed back to late in the year (e.g., September–December) or priced out entirely post-Iran conflict.

• Australia faces stickier inflation above the 2–3% target band, driven by strong activity and resource utilization. The US sees moderating but still-elevated inflation, with greater sensitivity to global energy shocks from the Iran-US conflict.

• This divergence supports AUD strength via wider yield differentials and carry flows. It contributes to relative dollar weakness at times (as seen in earlier 2026 sell-offs) but is tempered by the USD’s safe-haven status. Our April G10FX momentum factor ranked AUD as top contender, which is driving the model's gains MTD. This post noted the macro theme behind the recent performance in the Australian dollar