The Australian dollar has surged to a fresh multi-year high, reaching US70.46¢ as investors increasingly anticipate an interest rate increase by the Reserve Bank of Australia (RBA) next week. This peak marks the highest level the currency has traded against the US dollar since early 2023. So far this year, the Australian dollar has appreciated by 5.4 per cent.
The gains are largely attributed to money markets pricing in a 70 per cent probability that the RBA will implement a 25 basis point rate rise at its upcoming meeting. This move would potentially position Australia as the first major economy to shift from a policy of rate cuts to rate increases. Furthermore, investors are showing increasing interest in diversifying away from the US dollar and allocating capital to alternative assets, including gold, which is contributing to the Aussie dollar’s strength.
In addition to its performance against the US dollar, the Australian dollar has also strengthened against other major currencies. It was last up 1.1 per cent against the euro, trading at 58.82¢. The Aussie dollar also saw gains of 0.7 per cent against the British pound, reaching 50.90 pence, and 0.3 per cent against the Canadian dollar, hitting C95.33¢.
