Aussie Dollar Hits Five-Month High as Trade Talks Give Market a Boost
Aussie Dollar Soars on Trade Hope
The Australian dollar is celebrating, reaching a five-month high on Wednesday thanks to positive vibes surrounding U.S.-China trade talks. The Aussie surged to $0.6514, its strongest point since early December. While it faced some resistance at the key 65 cents mark, the overall trend is definitely upwards.
Wall Street Rallies on Trade Hints
The good news comes after U.S. Treasury Secretary Scott Bessent announced plans to meet with China’s top economic official in Switzerland on Saturday. This meeting, seen as a potential first step in resolving the ongoing trade war, sent Wall Street futures soaring by 1%.
Adding fuel to the fire, China’s central bank announced a move to boost its economy by cutting the amount of reserves banks must hold and lowering interest rates. This injection of liquidity is expected to have a ripple effect, further supporting the Aussie dollar.
Kiwi Stays Steady Amid Mixed Signals
Meanwhile, the New Zealand dollar showed a bit more hesitation. Although it briefly jumped on better-than-expected jobs data, it ultimately remained flat at $0.6011. While dairy prices rose, pushing the kiwi up overnight, strong resistance at $0.6029, a six-month high from late April, kept it in check.
Outlook Looks Bright for Aussie
The Australian dollar, often seen as a barometer of global risk appetite, has already gained 5% this year despite the ongoing trade tensions. Experts believe this positive momentum could continue, with the Aussie potentially reaching the 68 cent area.
Tony Sycamore, an analyst at IG, said, “It is a great sign that the Aussie is not going down when there’s bad news and it is swelling when there is good news. It supports the idea that the Aussie can push up to the sort of 68 cent area. Fundamentally the Aussie seems to be in a pretty good spot here.”
New Zealand’s Rate Cut Odds Remain High
In New Zealand, despite the positive jobs report, concerns about a weak labor market persist. Swaps still suggest a 70% chance the Reserve Bank of New Zealand will cut interest rates by a quarter-point later this month, with three cuts anticipated by year-end.
