A "Goldilocks scenario" has the Australian dollar on somewhat of a winning streak, experts say, particularly against the United States dollar.
It has reached a 10-month high against the US dollar this week, breaking 67 US cents for the first time since November 2024.
It slipped slightly following the United States Federal Reserve's rate cut announcement and the release of the Australian Bureau of Statistics' jobs data, which suggested the labour market could be cooling.
Chris Weston, the head of research at foreign exchange trader Pepperstone, told the SBS News' On the Money podcast this week that the Australian dollar was "looking quite good on a relative basis", particularly against the US dollar and New Zealand dollar
"The Aussie dollar has been performing very well on a broad basis as well," he said.
"And I think if you look at relative interest rates, relative growth, with a fairly low deficit compared to other countries, we're looking like a beacon of stability relatively speaking," Weston said.
Prices for iron ore — Australia's most valuable exports — have been solid, he said, and "absolutely ripping" share markets in China — Australia's largest trading partner — had in part helped create a "Goldilocks scenario for Australian dollar outperformance".
Growth doesn't tell the whole story
Because the Aussie dollar is a speculative currency, it's difficult to pinpoint where it should be valued or how it will grow in the future. But even then, experts say the perceived growth of the dollar isn't so much a success story for Australia, but more a reaction to the US.
Brendan Rynne, chief economist for KPMG Australia, said the growth had more to do with the valuation of the US dollar.
"It's got more to do with the fact that the US dollar is depreciating against most of the other currencies around the world than necessarily anything that's reflecting too positively on the Australian dollar," Rynne said.
Weston said the US dollar may be weakening due to concerns over whether the Federal Reserve could be "behind the curve" on interest rate cuts — having started later than others, including the Reserve Bank of Australia, weakening jobs data, and stagnant real wage growth.
He also said the impact of US President Donald Trump trying to "influence" the Federal Reserve carries a "slightly higher premium for the US dollar".
The US dollar has been falling since Trump took office for the second time, dropping by over 10 per cent in the first half of 2025 — its worst first-half performance in more than 50 years.
In contrast, the euro has rallied by more than 13 per cent against the greenback this year.
How will this affect consumers?
If you're planning on travelling overseas anytime soon, you might benefit from that value jump — or lose out — depending on where you're flying to. Because while the Australian dollar has appreciated against the US dollar, it has depreciated "quite substantially" against the pound and euro, Rynne said.
A year ago, the Australian dollar was buying around £0.52 and 60 euro cents. Now, it's about £0.49 and 56 euro cents.
"If you want to travel to the United States, your Australian dollars are going to buy you more than they would 12 months ago," Rynne said. "Having a nice holiday in the US will cost you a little bit less."
However, on the other side of the coin, travelling in Europe will be more expensive.
The dollar shift will also affect the cost to buy things from each country.
"If you were looking to buy something from the UK at the moment, it would be much more expensive than what it was 18 months ago. It's the same with Europe," Rynne said.
That means it will be more expensive for US companies to buy Australian goods and services, but more affordable for companies in Europe.
Still, Rynne said the Aussie dollar is in a "relatively good spot".
"We've got inflation under control, we've got a stable political environment, we've got an independent central bank, we have a recognition that rates are still likely to come down from where they are at the moment.
"All of those paint a strong picture in relation to the underlying value of the Australian dollar relative to other currencies."
Weston said he didn't anticipate a "ripping trend" would take the Australian dollar above 70 US cents — a feat last seen in 2022 — "anytime soon". But it could be a possibility if the US economy worsened but share markets held up, he said.
The information in this article is general in nature and is not intended as financial advice; you should consult with a licensed professional to make the decisions that are right for you.
