Aussie Hovers Near 13-Year High as Rate Outlooks Diverge
The Australian dollar held steady near a 13-year high against the New Zealand dollar on September 3, as markets bet on diverging rate outlooks between the Reserve Bank of Australia (RBA) and the Reserve Bank of New Zealand (RBNZ).
Despite the Aussie's decline by 0.1% to NZ$1.2227, it had previously jumped 1% overnight to hit a 13-year peak of NZ$1.2285, its biggest daily rise since April 2025.
The kiwi bounced back 0.2% to US$0.5863, after falling 0.7% overnight to its weakest level since July 30 at US$0.5802. Economists at Citi believe that the RBNZ's policy stance remains dovish, with a terminal rate of 2.75% this cycle.
The Aussie also drew support from better-than-expected economic data, which added to bets on the RBA raising interest rates for a fourth time at its September 28-29 meeting, priced at 55% probability. Paul Bloxham, chief economist at HSBC, now expects two rate hikes this year to a terminal rate of 4.85%, arguing demand growth is exceeding supply capacity.