Rate differentials · RBA vs Fed · priced as of 12 November 2026
AUD/USD interest rate differential: RBA vs Fed
As of 12 November 2026, the AUD/USD interest rate differential is +85 bp: the RBA's cash rate at 4.85% against the Fed's federal funds rate at 4.00%, in favour of the Australian dollar. Markets price the gap at +22 bp in six months; there is no twelve-month figure, because the Fed curve reaches only July 2027.
Over the next six months, markets price the gap to move −63 bp over six months, towards the US dollar. That six-month gap has moved −7 bp in a month.
The rate spread, now and priced ahead
| RBA (AUD) | Fed (USD) | Gap | |
|---|---|---|---|
| Policy rate now | 4.85% | 4.00% | +85 bp |
| Priced in 6 months | 4.88% | 4.66% | +22 bp |
| Priced in 12 months | 4.68% | curve ends July 2027 | n/a |
| 6-month gap a month ago | 4.82% | 4.54% | +28 bp |
The gap is AUD minus USD, in basis points (100 bp is one percentage point). Six and twelve months out is the rate implied after each bank's last meeting on or before that date. Market pricing, not a forecast. Each bank's meeting-by-meeting odds: RBA · Fed.
The carry on AUD/USD
The Australian dollar: the RBA pays 4.85% against 4.00%, a gap of +85 bp. Holding the higher-yielding currency against the lower earns roughly that gap a year before costs, which is what the carry trade collects; a move in the exchange rate can outweigh it.
How the gap feeds the exchange rate, and when it does not: rate differentials explained and the carry trade explained.
Questions
What is the AUD/USD interest rate differential?
As of 12 November 2026, the AUD/USD interest rate differential is +85 bp: the RBA's cash rate at 4.85% against the Fed's federal funds rate at 4.00%, in favour of the Australian dollar. Markets price the gap at +22 bp in six months; there is no twelve-month figure, because the Fed curve reaches only July 2027.
Is the RBA–Fed gap priced to widen or narrow?
Markets price the gap to move −63 bp over six months, towards the US dollar, from +85 bp now to +22 bp. A month ago (13 October) the same six-month gap was priced at +28 bp, so it has moved −7 bp since. That is market pricing, not a forecast.
Which side of AUD/USD has the carry?
The Australian dollar: the RBA pays 4.85% against 4.00%, a gap of +85 bp. Holding the higher-yielding currency against the lower earns roughly that gap a year before costs, which is what the carry trade collects; a move in the exchange rate can outweigh it.
Where does this pricing come from?
Each bank's priced path comes from the market instrument behind it: Exchange-traded futures, WatchTower model for RBA, Exchange-traded futures for Fed. The rate six or twelve months out is the one implied after the last meeting on or before that date. The month-ago figure is from our daily snapshot of the same curves.
More on AUD/USD: AUD/USD analysis · AUD/USD retail sentiment · AUD/USD seasonality · Australian Dollar outlook · Australian Dollar COT positioning · RBA rate expectations · Australian economic surprises · US Dollar outlook · US Dollar COT positioning · Fed rate expectations · US economic surprises
Other rate differentials: EUR/USD −150 bp · GBP/USD 0 bp · USD/JPY +275 bp · USD/CHF +400 bp · USD/CAD +150 bp · NZD/USD −125 bp · EUR/AUD −235 bp · GBP/AUD −85 bp · AUD/JPY +360 bp · AUD/NZD +210 bp · all 28
In WatchTower Terminal, the Rate spread panel draws the AUD/USD gap against the price. Nothing here is financial advice.