Australian dollar hits fresh 3-year peak, kiwi rises to 7-month top
- The Aussie was down 0.2% at $0.7025 in Asian trade as investor sentiment in share markets turned after mixed earnings from the US tech giants
SYDNEY: The Australian dollar scaled a new three-year peak on Thursday as gold prices surged to yet another record and bets grew for an imminent rate hike at home, helping also lift its kiwi cousin to a seven-month top.
Overnight, the US dollar got some respite from a selloff as Treasury Secretary Scott Bessent said Washington has a strong-dollar policy, after President Donald Trump brushed off the recent slide in the currency.
A slightly hawkish Federal Reserve that held rates steady, citing a “solid” economy also helped the greenback as markets pushed out the expected timing for the next rate cut to June after Chair Jerome Powell’s term ends in May.
Still, the two Antipodans outperformed. The Aussie hit an intraday high of $0.7050, after rising 0.4% overnight for its eighth straight session of gains. Prices for gold, a major Australian export, hit a new peak of nearly $5,600 an ounce on Thursday.
The Aussie was down 0.2% at $0.7025 in Asian trade as investor sentiment in share markets turned after mixed earnings from the US tech giants.
All of the Big Four Australian banks now expect a quarter-point rate hike from the Reserve Bank of Australia next Tuesday, after inflation surprised on the high side last quarter. Goldman Sachs and Deutsche Bank are among the few that are still calling for a hold.
“We do not view +0.9% qoq increase in trimmed mean inflation as a large enough upside surprise to the RBA’s forecast to warrant monetary policy shifting from an easing bias to an actual rate hike in just three months,” said Andrew Boak, chief economist at Goldman Sachs.
“We view February’s decision as a very close call and note several recent precedents where the RBA has been prepared to surprise market expectations.”
If RBA does hike next Tuesday, it would be the first non-Japan G10 central bank to raise rates in the current global easing cycle.
Across the Tasman Sea, the New Zealand dollar also eased 0.2% to $0.6050, having hit a seven-month peak of $0.6070 earlier in the session. Resistance is near $0.6060 and $0.6120.
The Reserve Bank of New Zealand next meets on February 18 and is considered certain to hold rates at 2.25%, though investors believe the next move will be up, but not until the second half of the year.
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