The Australian and New Zealand dollars were closing out 2025 with steady gains against the US dollar on Dec. 31, buoyed by investor bets that domestic interest rates could rise in the near term.
The Australian dollar held at $0.6695, just below a 14-month high of $0.6727, leaving it up more than 8% for the year and well above the $0.5910 low hit amid April’s tariff-driven market turbulence.
The New Zealand dollar hovered at $0.5787, posting a more modest annual gain of 3.5%, supported at $0.5736 and facing resistance near a three-month high of $0.5853.
The Aussie's rally has been driven by hotter-than-expected inflation readings, raising speculation the Reserve Bank of Australia could hike its 3.6% cash rate as soon as the February 3 policy meeting.
Of the four major local banks, CBA and NAB anticipate a February increase, while ANZ and Westpac expect rates to stay on hold through 2026, albeit with a bias toward tightening.