The Australian dollar slid past $0.668 on Monday, extending losses from the previous week as renewed geopolitical tensions weighed on global risk sentiment. The commodity-heavy currency, used as a liquid proxy for global risk appetite, depreciated following the US capture of Venezuelan President Nicolas Maduro. The decline highlights how sensitive risk-linked currencies can be to global shocks, even when they have little direct impact on domestic markets. However, Australia’s relatively high bond yields provided some support amid market speculation of further interest rate hikes. Investors currently assign about a 39% probability that the Reserve Bank of Australia could raise its cash rate as early as February, with attention focused on Wednesday’s inflation data. Markets now expect the annual consumer price index to tick down to 3.7% in November 2025, from 3.8% in the previous month.
