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Aussie Dollar Hits 16-Month High, Fueled by Global Uncertainty
28 Jan
Summary
- Australian dollar reached its highest level since September 2024.
- Soaring metal prices and a declining US dollar support the gains.
- Further appreciation is possible depending on upcoming inflation data.
The Australian dollar has experienced a remarkable surge, reaching a 16-month pinnacle against the US dollar. On Wednesday morning, it climbed past the 70 US cent mark, a level not seen since January and February of 2023. This impressive upward movement is attributed to several key factors.
Soaring prices for Australia's major export commodities, including base and precious metals, have provided substantial support. Concurrently, the US dollar has weakened significantly throughout the year, exacerbated by escalating global geopolitical turmoil, including events in Greenland, Venezuela, Iran, and trade tensions like a proposed tax on South Korea. This has driven a benchmark gauge of US dollar strength to its lowest point since 2022.
Domestic factors also contributed, with stronger-than-expected Australian employment data raising expectations of a potential interest rate hike by the Reserve Bank in February. Analysts are closely watching upcoming consumer price data, with elevated inflation figures potentially signaling further appreciation for the Aussie dollar, possibly pushing it towards 71 US cents.
