*aus- 1

"southern, of or pertaining to the south," 1540s, from Latin australis, from auster "south wind; south," from Proto-Italic *aus-tero- (adj.) "towards the dawn," from PIE *heus-tero- (source also of Sanskrit usra- "red; matutinal," usar-budh- "waking at dawn;" Greek aurion "tomorrow;" Lithuanian aušra "dawn;" Old Church Slavonic jutro "dawn, morning; tomorrow;" Old High German ostara "Easter"), from PIE root *aus- (1) "to shine," especially of the dawn.

The Latin sense shift in auster, if it is indeed the same word other Indo-European languages use for "east," for which Latin uses oriens (see Orient (n.)), perhaps is based on a false assumption about the orientation of the Italian peninsula, "with shift through 'southeast' explained by the diagonal position of the axis of Italy" [Buck]; see Walde, Alois, "Lateinisches etymologisches Wörterbuch," 3rd. ed., vol. I, p.87; Ernout, Alfred, and Meillet, Alfred, "Dictionnaire étymologique de la langue latine," 2nd. ed., p.94.

Or perhaps the connection is more ancient, and from PIE root *aus- "to shine," source of aurora, which also produces words for "burning," with reference to the "hot" south wind that blows into Italy. Thus auster "(hot) south wind," metaphorically extended to "south."

from Latin Terra Australis (16c.), from australis "southern" + -ia. A hypothetical southern continent, known as terra australis incognita, had been proposed since 2c. Dutch explorers called the newfound continent New Holland; the current name was suggested 1814 by Matthew Flinders as an improvement over Terra Australis "as being more agreeable to the ear, and an assimilation to the name of the other great portions of the earth" ["Voyage to Terra Australis"]. In 1817 Gov. Lachlan Macquarie, having read Flinders' suggestion, began using it in official correspondence. The ultimate source is Latin auster "south wind," hence, "the south country" (see austral).