Aussie Dollar Roars to 3-Year High as Gold Explodes — Rate Hike Bets Ignite FX Rally

 

SYDNEY — The Australian dollar just hit its strongest level in three years, riding a blistering surge in gold prices and growing speculation that the Reserve Bank of Australia is about to pull the trigger on a rate hike. The rally spilled across the Tasman, lifting the New Zealand dollar to a seven-month high.

The Aussie ripped as high as $0.7050, extending its winning streak to eight straight sessions, fueled by a relentless commodities boom. Gold — one of Australia’s most critical exports — smashed through yet another record, rocketing toward $5,600 an ounce.

Meanwhile, the US dollar found only temporary relief after Treasury Secretary Scott Bessent reaffirmed Washington’s “strong dollar” stance, following President Donald Trump’s dismissal of the recent greenback slide. A slightly hawkish Federal Reserve also offered support, holding rates steady and pointing to a “solid” US economy — pushing expectations for the next rate cut back to June.

Still, the Antipodeans outperformed.

Markets are now laser-focused on next week’s RBA decision. All four major Australian banks are calling for a quarter-point rate hike, after inflation once again surprised to the upside. Only a handful of holdouts — including Goldman Sachs and Deutsche Bank — remain unconvinced.

Goldman’s chief economist Andrew Boak cautioned that the 0.9% quarterly jump in trimmed mean inflation may not be enough to justify a rapid pivot from easing to tightening, calling the February decision a “very close call.” Still, he acknowledged the RBA’s track record of blindsiding markets.

If the RBA hikes next Tuesday, it would become the first non-Japan G10 central bank to raise rates during the current global easing cycle — a potentially seismic shift for currency markets.

Profit-taking briefly cooled the Aussie in Asian trade, slipping 0.2% to $0.7025, as mixed earnings from US tech giants dented equity sentiment.

Across the Tasman Sea, the kiwi dollar also pulled back 0.2% to $0.6050 after tagging a seven-month high at $0.6070. Key resistance sits near $0.6060 and $0.6120.

The Reserve Bank of New Zealand meets on February 18 and is widely expected to hold rates at 2.25%, though traders are increasingly betting the next move will be up, likely later this year.

Bottom line: commodities are on fire, rate-hike expectations are building, and the Aussie dollar is suddenly one of the hottest currencies on the planet.