Australian dollar climbs to highest since Oct 2024 on RBA bets

[CANBERRA] The Australian dollar climbed to its strongest in more than a year after traders ratchet expectations the Reserve Bank of Australia (RBA) will quickly shift to raising interest rates early next year. 

The Aussie rose 0.2 per cent to 67.13 US cents, the highest since October 2024. The move extends its gain to 1.5 per cent this quarter, among the best performing major developed market currencies.

The currency has been on a tear since mid-November with traders betting on a quick turnaround in monetary policy as consumer spending lifts and robust wage data add to inflation pressures.

Traders anticipate the RBA could hike its key rate as early as June after the central bank at its December meeting signalled its easing cycle is over. 

The Aussie’s rally is likely to extend to 68 US cents by the year-end as it typically strengthens in the last two weeks of the year, Commonwealth Bank of Australia strategists including Kristina Clifton wrote in a note dated Dec 22. The improving global backdrop and an expectation of an RBA rate hike in early 2026 will support the currency over the coming month, they said. BLOOMBERG