The Australian dollar is trading strongly at US65.34¢ in early Tuesday trade, buoyed by growing optimism that the US federal government may be nearing a resolution to its fiscal challenges. This positive sentiment has boosted risk assets, contributing to the Aussie’s robust performance. On Monday, the Australian dollar surged by 0.7 per cent, marking its most significant single-day gain in nearly three months.
Against the New Zealand dollar, the Australian dollar has reached a 12-year high of $NZ1.1585. This rise reflects a widening divergence in interest rate outlooks between the two countries. The Reserve Bank of New Zealand (RBNZ) is widely expected to cut its cash rate by 25 basis points to 2.25 per cent this month, with some analysts suggesting a possibility of a more aggressive 50-basis point cut.
Conversely, the Reserve Bank of Australia (RBA) is anticipated to maintain its benchmark interest rate at 3.6 per cent well into the coming year. Some analysts suggest the RBA’s easing cycle may have already concluded. CBA FX strategist Kristina Clifton noted, “We forecast that AUD/NZD could rise to $NZ1.17 over the remainder of the year.”
Clifton further added, “In our view, there is room for more good news on the Australian economy that will take out pricing for a final 25-basis point RBA cut.” CBA, or Commonwealth Bank of Australia, is one of Australia’s largest financial institutions, providing a wide range of banking and financial services. CBA operates both domestically and internationally.
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