Aussie Dollar Breaks 0.70—Gold Speeds Up, RBA Also in the Spotlight
The Australian dollar (AUD) surged past $0.70 on Thursday, hitting a three-year high. This strengthening was driven by two main drivers: the intensifying gold rally and speculation that the RBA could raise interest rates soon.
These expectations were fueled by the latest economic data. Higher-than-expected inflation yesterday, coupled with a surprising drop in unemployment last week, has led the market to increase bets on a 25 bps interest rate hike as soon as next Tuesday. Four major Australian banks now see a hike as a plausible scenario, with market pricing indicating a probability above 70%. Market projections also point to an interest rate of around 3.85% in May and closer to 4.10% in September.
However, not everyone agrees that the RBA will "go all out." Several banks still believe interest rates can remain on hold, as the 0.9% increase in core inflation per quarter is not considered sufficient to "lock in" the RBA's decision. Meanwhile, gold—Australia's key export commodity—surged to nearly $5,600 per ounce, boosting currencies sensitive to this commodity. The continued weakening of the US dollar also added support, amid concerns about US-Japan intervention, Trump's comments, and uncertainty surrounding geopolitics, trade, and the direction of global monetary policy. (az)
Source: Newsmaker.id
