Australian Dollar Hits 3-year High

The Australian dollar strengthened to around $0.716, hitting its highest level since May 2022, boosted by mounting expectations of a rate hike next week. The Reserve Bank’s deputy governor signaled that rising oil prices could push inflation higher, increasing pressure for a rate increase at the March 17 meeting, which the central bank has described as “live” on rates. Markets quickly lifted the odds of a March hike to around 75%, up from below 30% earlier in the week, with another move now fully priced by August. In total, traders are pricing about 60 bps of tightening this year, which could push the cash rate above its post-pandemic peak hit when inflation exceeded 7%. Currently, the headline inflation sits at 3.8% and is expected to surpass 4% as petrol prices continue to climb, while core inflation remains elevated at 3.4%, well above the RBA’s 2–3% target band. Elsewhere, markets remained on edge amid conflicting reports and mounting uncertainty surrounding the Middle East war.

AUDUSD increased to 0.71, the highest since February 2023. Over the past 4 weeks, Australian Dollar US Dollar gained 0.26%, and in the last 12 months, it increased 13.46%.

The Australian dollar appreciated past $0.71 on Tuesday, marking its third consecutive session of gains, driven largely by a weakening greenback. The US dollar lost ground as demand for safe-haven assets eased, following US President Trump’s remarks on the Iran conflict, which he described as “very complete,” adding that Washington was “very far ahead” of his initial four- to five-week estimated timeframe. Trump also said he expects oil prices to fall, after crude recently surged above $100 per barrel. In Australia, the Westpac–Melbourne Institute Consumer Sentiment Index rose 1.2% month-on-month to 91.6 in March 2026, marking its first gain since November. In contrast, the NAB Business Confidence Index dropped to -1 in February, recording its first negative reading since April 2025. Meanwhile, the RBA is set to announce its policy decision next week, with money market traders now pricing in two rate hikes by August and a strong chance of three by year-end, implying a peak of 4.5%.