Why the Aussie Dollar’s Rise Is Good for Your Wallet

The Australian dollar’s sudden push toward 70 US cents raises an important question: why is global money backing Australia again when households still feel under pressure? Even if relief hasn’t arrived yet, the move is telling us something about where the economy is heading. Markets are starting to treat Australia as steady, resilient and worth backing again. That shift matters more than most people realise.

Historically, 70 cents has been the sweet spot for the Aussie dollar. When it’s around the mid-60 cents, Australia effectively imports inflation. Fuel, electronics, cars and everyday goods all get more expensive. Above the mid-70 cents, exporters start to feel real pain as margins compress. Around 70 cents sits the balance point: strong enough to ease inflation, but not so strong that it chokes off growth. That’s why this move matters.

Let’s start with the obvious upside. Your Bali trip just got cheaper. Flights, hotels, shopping overseas and anything priced in US dollars now costs a little less. Imported goods follow the same logic. Phones, cars, electronics and clothing stop creeping higher in price when the dollar strengthens. It doesn’t show up overnight, but it shows up eventually.

This is where the conversation usually gets lost. A stronger dollar doesn’t magically fix the cost-of-living crisis, and anyone promising that is selling fantasy. Rent doesn’t fall because the Aussie dollar ticks higher, and insurance bills don’t ease because of foreign exchange moves. Electricity prices don’t care what the currency is doing. Those pressures are home-grown, policy-driven and deeply structural.

What the dollar does do is stop things from getting worse. When the currency is weaker, every imported item quietly adds fuel to inflation. That pressure has now eased. Households aren’t winning yet, but they’ve stopped losing ground on that front.

This shift also matters for interest rates. A rising dollar takes pressure off inflation, and inflation is what keeps the RBA awake at night. The stronger the currency, the less urgent the case for higher interest rates becomes. That doesn’t mean cuts are coming tomorrow, but it does mean the RBA can breathe a little easier.

But, there’s a trade-off. Exporters feel the pinch when the dollar rises. Miners, energy producers and agricultural exporters can see margins tighten, but Australia sits in a rare position. Global demand for our resources remains strong, and buyers still need what we dig out of the ground. That softens the blow.

For everyday Australians, the real takeaway is perspective. The dollar’s move is a signal, not a solution. It tells you inflation pressure is easing at the edges. It shows that global money is flowing back to Australia and suggests things are stabilising, even if they’re not comfortable yet. Watch the dollar the same way you watch the weather. It won’t decide your entire future, but it shapes the conditions you live in. Right now, the wind has shifted slightly in Australia’s favour.

And yes, enjoy the cheaper Bali cocktails while you can.

What were the best and worst-performing sectors last week?

The best-performing sectors included Utilities, up 5.14 per cent, followed by Energy, up 3.56 per cent and Materials, up 1.53 per cent. The worst performing sectors included Real Estate, down 2.01 per cent, followed by Financials, down 1.88 per cent and Communication Services, down 1.56 per cent.

The best performing stocks in the ASX top 100 included Life360, up 15.60 per cent, followed by Evolution Mining, up 13.26 per cent and Perseus Mining, up 8.92 per cent. The worst-performing stocks included A2 Milk Company, down 12.98 per cent, followed by Pro Medicus, down 10.83 per cent and Light & Wonder, down 9.71 per cent.

What's next for the Australian stock market?

The All-Ordinaries Index made a solid start last week, but sellers ultimately took control, pushing the market lower by just under half a per cent by Friday’s close. With that bearish finish, investors should be alert to the risk of further downside early next week, with 9100 and 9000 shaping up as key support levels where buyers are likely to step in.

One of the most important takeaways from last week’s price action was the market’s reaction to the 9300 level. Since August last year, the All Ords has repeatedly tried and failed to close above this level with conviction. Once again, sellers emerged around 9300, reinforcing it as the critical battleground for the weeks ahead.

A decisive close above 9300 would be a major bullish signal and open the door to new all-time highs. From there, a move toward 9800 is very achievable this year, and in a stronger bullish scenario, the psychological 10,000-point milestone comes into view.

At a sector level, Materials continue to show impressive resilience, while Energy was the clear standout, surging more than 4 per cent. Strong LNG pricing, ongoing geopolitical tensions, and rising northern-hemisphere winter demand have combined to create a powerful tailwind. This backdrop should continue to support Energy stocks and may also flow through to Utilities as the year unfolds.

Overall, it’s been an excellent start to the year. January delivered close to a 3 per cent gain and set a confident tone heading into 2026. For those who used the break to refine their strategy and prepare watchlists, this is exactly the type of market environment those preparations are made for. The market is moving again so, it’s game on.

For now, good luck and good trading.

Dale Gillham is the Chief Analyst at Wealth Within and the international bestselling author of How to Beat the Managed Funds by 20%. He is also the author of the award-winning book Accelerate Your Wealth—It’s Your Money, Your Choice, which is available in all good bookstores and online.

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