Been watching the AUD pretty closely lately and there's definitely some interesting dynamics playing out. The RBA has been sounding pretty hawkish after those inflation surprises, and now there's talk they might even consider hiking rates sometime in 2026. The market's pricing in about a 29% chance of a rate hike at the February meeting, which is interesting.

So here's what caught my eye - the employment data coming out is going to be crucial for AUD direction. If we get a weak jobs report, I'd expect the currency to take a hit despite all the hawkish rhetoric from the central bank. But if the numbers come in hot, that should keep supporting the AUD given these hawkish expectations. The thing is, the RBA is more focused on the quarterly inflation data, but the labour market can still move things around, especially if there's a big surprise either way.

On the USD side, it's been getting beaten up this week following all the political noise. There's been some positioning unwind in the dollar longs, and we're seeing it reflect in the pair. The technical picture shows AUD bounced nicely from around 0.6665 and wiped out most of January's dollar gains pretty quickly.

If I'm looking at this from a trading angle, buyers might find better risk setups around that 0.6665 support zone if we pull back. Sellers would need a break below to target the 0.6600 level. The real catalyst though is tomorrow's employment report - that's the one to watch for AUD volatility.