Australian Dollar: Aussie Hits Seven-Month Low as US Dollar Strengthens

SYDNEY: The Australian dollar fell to a seven-month low on Thursday as a stronger US dollar increased pressure on the currency, threatening to push it below a key support level. The New Zealand dollar also hovered near a 19-month low.

The Australian dollar slipped 0.1 per cent to $0.6838, its weakest level since March, after declining 0.3 per cent on Wednesday.

The currency was trading just above support at $0.6834. A sustained break below that level could push it towards levels last recorded in January.

Meanwhile, the New Zealand dollar remained steady at $0.5569 after falling 0.8 per cent on Wednesday, leaving it close to its 19-month low of $0.5529. Its near-term resistance level was around $0.5650.

The Australian dollar also faced pressure from a broader selloff in equities on Thursday, amid reports concerning Nvidia’s leadership. The company’s board was reportedly scheduled to discuss the possible removal of Chief Executive Jensen Huang late Wednesday, while Nvidia shares fell 8 per cent in after-hours trading.

Imre Speizer, a strategist at Westpac, said market momentum had shifted towards further weakness in the Australian dollar. He added that the Reserve Bank of Australia’s more cautious policy stance and market expectations that its rate-hiking cycle could be over were likely to weigh on the currency in the near term.

However, Speizer said a recovery towards $0.7200 by the first quarter was possible, particularly if the Federal Reserve did not deliver the two rate increases that markets had priced in by April 2027.

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In broader foreign exchange markets, the US dollar remained close to a 19-month high as expectations grew that the Federal Reserve could raise interest rates by 50 basis points next month to contain inflation. Markets were assigning a 10 per cent probability to such an increase.

Separately, Reserve Bank of Australia board member Marnie Baker cancelled a scheduled public appearance on Thursday due to unforeseen family circumstances.

Despite expectations of tighter US monetary policy, the Reserve Bank of Australia was widely expected to keep interest rates unchanged at an 18-year high of 4.85 per cent until the second half of 2027, when rate cuts are expected to come into view.

The Reserve Bank of New Zealand, meanwhile, was widely expected to raise its benchmark interest rate by 25 basis points to 3 per cent in December, with markets pricing in two further increases by the end of next year.