The Australian dollar is endorsing a positive view on global growth this year.
It's made a strong move higher against the US dollar today, gaining 83 pips to 0.6843. That's the best level since October 2024, a month when AUD/USD touched 0.6942 before failing to truly challenge the 70-cent figure. From there it sank as low as 59-cents in the aftermath of Trump's Liberation Day before embarking on a steady grind higher to current levels.
The latest move higher is a sharp one, in part due to Australia's status as a major mining exporter. The jump in gold prices is likely to set off a fresh round of inbound capital expenditures in mining exploration and development. In addition, copper is near all-time highs.
In the bigger picture, I think the Australian dollar is sniffing out an improving global growth picture, in large part due to stronger government spending. The Trump administration is running large fiscal deficits and the turmoil in Germany led to a step change in German spending. Lately, Chinese growth indications are flagging and speculation is climbing regarding more fiscal stimulus. In Japan, PM Takaichi is running on fresh stimulus, despite the risk of rising borrowing costs.
The world is also looking for an island of stability away from Trump's ever-changing whims. That's precisely what Australian and New Zealand have turned into (NZD is also up 1.1% today). There is plenty to like in both these economies as we work out way through a tumultuous time in global geopolitics.
I think AUD/CAD is telling in the geopolitical lens. The Aussie is at the highest since 2023 against the loonie despite being a fellow commodity currency and with both central banks at roughly the same spot in the cycle, though the RBA is closer to hiking rates.
Canada faces the prospect of a trading squeeze with the United States, while Australia does little trade with the US and has managed to China relationship successfully.
