Weekly FX Update
20 July 2026
The AUD is close to 0.70 — but oil is making everyone nervous again
The Australian dollar begins the week in a steadier position, with the latest official reference rate showing AUD/USD at 0.6980. That leaves the currency close to the psychologically important 0.70 level, but not yet clearly through it.
The main complication is oil. Renewed Middle East escalation has pushed crude prices sharply higher again, with Brent crude moving above US$90 per barrel and WTI trading near US$85 per barrel. This matters for FX because higher oil prices can quickly feed back into inflation expectations, central-bank pricing and safe-haven demand for the US dollar.
For the AUD, this week is less about domestic data and more about offshore signals. Australia’s local calendar is light, while the US, Europe, China and Japan provide the main market-moving events.
What’s Driving Markets This Week
- US dollar remains well supported as the US economy continues to outperform many of its major peers and markets push back expectations for Fed rate cuts.
- Oil prices remain elevated due to ongoing geopolitical risks in the Middle East, keeping inflation concerns alive for central banks globally.
· The Australian dollar remains under pressure, having broken below its multi-month uptrend after retreating from this year’s highs. Markets are closely watching Australian employment data later this week.
What’s Happening
The 0.70 level remains the AUD’s immediate test
AUD/USD has recovered from the lower levels seen earlier in July and is now sitting close to 0.70. A sustained break above that level would improve short-term sentiment, but the AUD still needs help from offshore data and calmer energy markets.
Oil is again the main macro wildcard
Higher oil prices can be mixed for the AUD. Australia benefits from commodity-linked sentiment, but sharp oil rallies also raise global inflation risks. In the current environment, the inflation channel is important because it may keep central banks cautious and support the US dollar.
China policy remains important for AUD sentiment
China is expected to keep its benchmark loan prime rates unchanged, with the one-year LPR at 3.00% and the five-year LPR at 3.50%. Markets will watch whether Beijing signals more fiscal or monetary support after softer growth indicators.
The ECB decision matters for EUR/AUD
The European Central Bank meets this week. Markets broadly expect no change, but the tone of President Lagarde’s comments will be important given the renewed oil shock and persistent inflation concerns. A more hawkish ECB could support the euro and weigh on AUD/EUR.
The US calendar is lighter, but still relevant
There is no US CPI or payrolls release this week, but jobless claims, flash PMIs and new home sales will still matter. Strong US activity data would support the USD. Softer PMIs would make it easier for AUD/USD to test 0.70 more convincingly.
Key Exchange Rates (Indicative)
Currency pair Indicative level Current tone
AUD/USD 0.6980 Firmer, testing the 0.70 area
AUD/EUR 0.6101 Slightly firmer
AUD/GBP 0.5185 Stable to modestly firmer
AUD/NZD 1.1962 Softer versus recent weeks
AUD/JPY 113.36 Supported by weak JPY
AUD/CNY 4.7287 Sensitive to China policy and growth signals
| AUD Trade-Weighted Index 65.3 Broadly firmer | ||
Key Economic Events This Week (Sydney Time)
| Day | Event | Why It Matters |
| Mon 20 Jul, late morning | China — Loan Prime Rate decision | Important China-policy signal for AUD sentiment |
| Wed 22 Jul, 11:30am | Australia — RBA Bulletin | Domestic policy and economic commentary; usually limited immediate FX impact |
| Thu 23 Jul, 10:15pm | Euro Area — ECB monetary policy decision | Key event for EUR/AUD |
| Thu 23 Jul, 10:45pm | Euro Area — ECB press conference | Guidance may matter more than the rate decision |
| Thu 23 Jul, 10:30pm | United States — Initial jobless claims | Labour-market signal for USD pricing |
| Fri 24 Jul, morning | Japan — June CPI | Relevant for JPY and AUD/JPY
|
AUD Outlook
The AUD starts the week with a neutral-to-slightly constructive bias. The currency has improved toward 0.70 against the USD, but the next move depends heavily on oil headlines and whether global activity data supports risk appetite.
The most supportive scenario for the AUD would be stable oil prices, no negative surprise from China, a balanced ECB tone and softer US PMIs. That combination would reduce USD support and give AUD/USD a better chance of testing levels above 0.70.
The less favourable scenario would be another jump in oil, stronger US data and cautious risk sentiment. In that case, AUD/USD may struggle to hold recent gains and could drift back toward the mid-0.69 area.
For businesses with upcoming USD payments, the key watchpoints are Thursday night and Friday night Sydney time. For EUR and GBP exposures, Thursday’s ECB meeting and Friday’s PMI releases are the main event risks.
Expected AUD/USD trading range: 0.685 – 0.700.
Quick Take
- ✅ Markets are refocusing on central banks.
- ✅ Australian employment is the key domestic event this week.
- ✅ The ECB meeting and global PMI data will provide fresh direction for currencies.
- ✅ Geopolitical risks remain an important wildcard through higher energy prices.