{"id":722606,"date":"2026-06-08T07:36:15","date_gmt":"2026-06-08T07:36:15","guid":{"rendered":"https:\/\/www.newsbeep.com\/au\/722606\/"},"modified":"2026-06-08T07:36:15","modified_gmt":"2026-06-08T07:36:15","slug":"australian-dollar-dives-to-two-month-low-as-interest-rate-fears-grip-markets","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/au\/722606\/","title":{"rendered":"Australian dollar dives to two-month low as interest rate fears grip markets"},"content":{"rendered":"

The Australian dollar has found itself under renewed pressure.<\/p>\n

Earlier, the local currency hit 70.18 US cents, the lowest level since April 8 when it was 69.46 US cents.<\/p>\n

Later that day, it surged to 70.67 US cents as a two-week truce between the US and Iran was mediated by Pakistan.<\/p>\n

At 4pm AEST, the Australian dollar was trading at 70.39 US cents.<\/p>\n

The weakness stems from a renewed surge in the US dollar as global interest rates, including US interest rates, rise.<\/p>\n

\"An<\/p>\n

The US dollar is surging as interest rates rise. (ABC News: Giulio Saggin)<\/p>\n

“The US dollar is up versus all other major currencies,” InTouch Capital Markets senior FX strategist Sean Callow said.<\/p>\n

Friday saw a major Wall Street sell-off, sparked by a much better-than-expected US employment report.<\/p>\n

Australia marks 60 years since switching to decimal currency<\/a><\/p>\n

Six decades ago, Australia swapped its old currency for dollars and cents. A catchy jingle sung by a cartoon character named Dollar Bill helped the country adapt.<\/p>\n

While more jobs sound like good news, it ignited concerns the US Federal Reserve would need to either keep interest rates unchanged or even raise them later this year.<\/p>\n

Rising interest rates are negative for stocks because they increase corporate borrowing costs, restrain economic growth and more heavily discount future company cash flows when a company is valued.<\/p>\n

Wall Street’s technology-heavy NASDAQ index fell 4 per cent.<\/p>\n

“It’s all about higher US yields, [a] stronger US dollar and the accompanying equity [share market] reversal,” Mr Callow said.<\/p>\n

The further the Australian dollar falls, the lower the purchasing power for Australian tourists heading overseas.<\/p>\n

Loading<\/p>\n

It is, however, positive for Australian exporters as it makes their products and services more price-competitive.<\/p>\n

Economists at AMP noted that global financial markets, more broadly, are getting nervous about higher inflation and rising interest rates as the Middle East conflict drags on.<\/p>\n

“Australia is no longer expected to be an outlier with rising interest rates,” AMP deputy chief economist Diana Mousina said.<\/p>\n

\"Kevin<\/p>\n

The US Federal Reserve is likely to change course after the April appointment of the pro-Trump Kevin Warsh as chair. (Reuters: Kevin Lamarque)<\/p>\n

“Markets are pricing in higher interest rates globally, which is keeping [bond] yields elevated.<\/p>\n

“This week, US Federal Reserve regional president Lorie K Logan, spoke hawkishly about the outlook for rates and she sees the risk for higher interest rates later this year.<\/p>\n

Trump’s threats to Europe could hit a huge debt wall<\/a><\/p>\n

For decades, global investors have bought US government debt as a safe haven when things turn pear-shaped. But investor attitudes are changing, and America’s financial domination is at stake.<\/p>\n

“Another governor Williams was more neutral.<\/p>\n

“Kevin Warsh, the new Fed chair, will hold his first meeting as chair in a few weeks, so there may be some changes to Fed communication and focus ahead,” Ms Mousina said.<\/p>\n

The Australian share market (ASX) was closed today for the King’s Birthday long weekend.<\/p>\n

Asian share markets, however, fell heavily on Monday, taking their lead from Wall Street’s sell-off on Friday.<\/p>\n

South Korea’s KOSPI fell 8 per cent at the open of trading, triggering a brief suspension in trading.<\/p>\n

By late afternoon, after falls were tempered throughout the day, the index was back down over 8 per cent.<\/p>\n

Japan’s Nikkei 225 fell over 4 per cent.<\/p>\n

Australia’s Reserve Bank is likely to be watching the dollar given a significantly lower Australian dollar adds to inflationary pressure in the economy.<\/p>\n","protected":false},"excerpt":{"rendered":"The Australian dollar has found itself under renewed pressure. Earlier, the local currency hit 70.18 US cents, the…\n","protected":false},"author":2,"featured_media":722607,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[64,29217,350109,63,166,12970,13110,5931,5465,206980,44,350110,350111],"class_list":["post-722606","post","type-post","status-publish","format-standard","has-post-thumbnail","category-australia","tag-au","tag-aud","tag-aud-to-usd","tag-australia","tag-australian-dollar","tag-currencies","tag-debt","tag-economic-indicators","tag-inflation","tag-iran-war","tag-news","tag-two-month-low","tag-volatile-currencies"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/722606","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=722606"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/722606\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/722607"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=722606"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=722606"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=722606"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}