Australian dollar hovers near 13-year high on kiwi as rate outlooks diverge

According to Business Recorder, the Australian dollar stayed close to a 13-year high against the New Zealand dollar on Thursday after climbing 1% overnight to NZ$1.2285. The Aussie eased 0.1% to NZ$1.2227 following its biggest daily gain since April 2025. That rise was driven largely by a steep fall in the kiwi after the Reserve Bank of New Zealand (RBNZ) delivered a dovish rate increase, leaving traders expecting a policy hold next month after two hikes this year.

The kiwi recovered 0.2% to $0.5863, having dropped 0.7% overnight to $0.5802, its weakest level since July 30. Citi economist Faraz Syed said his dovish stance on the RBNZ was unchanged, and that 2.75% would prove the final rate in this cycle. The Aussie held at $0.7170 after a 0.3% gain, with markets pricing a 55% chance of a fourth RBA increase at the September 28-29 meeting.

HSBC chief economist Paul Bloxham now expects the RBA to hike twice this year, reaching a final level of 4.85%. Swaps imply 40 basis points of tightening from the RBA next year, roughly one and a half hikes. Meanwhile, the yen surged, and the Aussie and kiwi slid 0.7% and 0.4% to 113.05 yen and 92.49 yen, with traders alert to possible Japanese intervention.