(Tamika Seeto’s article from the NEWS.COM.AU on 09 November 2026.)
Aussie dollar drops to lowest level
since March after RBA interest rate hike: An RBA call and global jitters have
pushed the Aussie dollar into dangerous territory, and economists warn there’s
more pain to come.
The Australian dollar has reached
its lowest level since March as a “brutal” combination of factors saw it take
the crown for the worst-performing of the major currencies last week. The
Aussie dollar finished the week down 2.3 per cent against the US dollar, buying
about 68.66 US cents.
CommSec equity market commentator James Gruber said there were a few reasons behind the Aussie dollar’s sharp fall. “The main one was a shift in interest rate expectations following the RBA’s rate hike last Tuesday,” Mr Gruber told news.com.au.
“The split decision to hike in
November has led some investors to think interest rates may have peaked.
Markets are now pricing in a rate cut by December 2027. Before Tuesday’s
decision, they had expected rates to remain unchanged next year. By contrast,
markets still expect the US to raise interest rates by April next year.”
The Aussie dollar fell 0.5 per cent
directly after the Reserve Bank of Australia hiked the cash rate on Tuesday in
a split 6 to 3 vote to 4.85 per cent. “Interest rate differentials can have a
significant influence on currencies because higher rates in one country can
make its assets more attractive to investors relative to those in another,” Mr
Gruber said.
Five interest rate hikes this year
mean the cash rate is now at its highest level since 2008. The economy is
slowing, with Commonwealth Bank seeing growth troughing at 1 per cent per year
in mid 2027 and home prices expected to record the biggest downturn on record. “The
other factor weighing on the Aussie dollar is its status as a commodity
currency, with key commodities such as oil and copper notably weaker last
week,” Mr Gruber said.
Brent crude was sitting at around
$US98 a barrel on Friday night, while copper declined to its lowest level since
July as investors worried about threats to the previous bullish backdrop for
the metal after the US midterms. Copper was down 0.3 per cent on Friday to
$US13,883 a tonne.
Commonwealth Bank economists have
warned the Aussie dollar faces further downside if global share markets or
crude prices stumble. NAB chief economist Sally Auld said the Aussie dollar
finished the week at its lowest level since March and was the worst-performing
G10 currency last week.
“The combination of risk aversion on global markets and a weaker domestic economic outlook proved brutal for the currency pair,” she said. The Japanese Yen strengthened against the US dollar on Friday to 158.48, with the pair recently stable around the 158 level.
Dr Auld said she suggested some of
the Japanese yen’s “safe haven attributes may be coming to the fore once more
in an environment of volatile equity markets”.
The Canadian dollar was 0.8 per
cent higher on Friday due to the divergence in labour market data, with US
payrolls data beating consensus and adding 165,000 jobs for the month while the
Canadian labour market data showed jobs falling 4700 in the month. The Euro,
meanwhile, fell below the 1.12 level in Friday’s session, closing at 1.1143,
not far from the year-to-date low of 1.1125 against the US dollar.
