Australian dollar rises above US72 cents and reaches strongest euro level since 2024
Key Takeaways
- •The Australian dollar was trading around US72.2c on Wednesday after reaching a four-month high against the US dollar earlier in the week.
- •Wise recorded the currency at €0.62 on Tuesday, the highest level against the euro in that data series.
- •Stronger-than-expected Australian inflation has raised expectations that the Reserve Bank could increase interest rates again, with Westpac projecting a possible November move.
- •A stronger Australian dollar makes overseas travel and imported goods relatively cheaper for Australian consumers.
- •Upcoming interest-rate decisions, inflation data, oil prices and Middle East developments are expected to influence the currency’s next moves.
The Australian dollar is continuing to strengthen against major currencies, moving above US72 cents and reaching its strongest level against the euro since late 2024.
The currency was trading at around US72.2c on Wednesday after briefly reaching a four-month high against the US dollar earlier in the week. The Reserve Bank of Australia’s latest reference rates placed the Australian dollar at US72.1c and €0.6 on Tuesday afternoon.
The move against the euro has been particularly notable. According to Wise, the Australian dollar reached €0.62 on Tuesday, its highest level against the European currency on record for that data series.
The Australian dollar’s gains come as markets reassess the outlook for interest rates in Australia and the United States. Stronger-than-expected Australian inflation has fueled expectations that the RBA could raise interest rates again, with Westpac forecasting a potential increase in November. Higher Australian yields can make the currency more attractive to global investors.
The euro has also been supported by expectations of further monetary tightening from the European Central Bank, which is widely expected to raise rates by 25 basis points this week.
For Australians, a stronger dollar increases purchasing power overseas and makes imported goods and foreign travel relatively cheaper. The rally is taking place against a more complicated global backdrop, with oil prices surging towards US$100 a barrel as tensions in the Middle East escalate.
Attention will remain on upcoming central-bank decisions and inflation developments, as these will help shape expectations for the relative path of Australian, US and European interest rates. Oil prices and developments in the Middle East are also part of the broader backdrop for the currency’s next moves.
The material provided in the original article is for information only and should not be treated as investment advice. Readers are encouraged to conduct their own research and consult a certified financial adviser before making investment decisions.
