The Australian dollar against the New Zealand dollar has reached a 13-year high! The divergence in policies between the Australian and New Zealand central banks is intensifying, leading to an increase in interest rate differential trading.

Notably, the Australian dollar has risen to a new high against the New Zealand dollar in 13 years, primarily driven by the divergent interest rate outlooks of the two central banks and rising metal prices. The Australian dollar against the New Zealand dollar increased by as much as 0.4% to 1.2332 NZD after Assistant Governor of the Reserve Bank of Australia, Sarah Hunter, indicated that the central bank may have to raise interest rates again to curb inflationary pressures, marking the highest level since April 2013. Prior to this, Reserve Bank of New Zealand board member Prasanna Gai commented that the cash rate may already be in a neutral range. This movement has expanded the Australian dollar's gains against the New Zealand dollar this year to 6.2%, on track for the best annual performance in over two decades, as traders bet that the interest rate differential between the two countries would widen further. According to swap agreement data, the market expects the Reserve Bank of Australia to raise interest rates at least once more this year, while the Reserve Bank of New Zealand may not have another opportunity to raise rates until February next year. In addition, the Australian dollar is supported by rising prices of its key export metals, with iron ore prices rebounding to over $100 per ton and copper prices reaching an all-time high. Sean Carlo, a senior analyst at ITC Markets in Sydney, stated, Previously established short positions in the Australian dollar against the New Zealand dollar, based on New Zealand's agricultural export mix performing better and being slow to close, may now be getting cleared out due to the RBA's hawkish shift, the RBNZ's lack of urgency for further rate hikes, and the strong performance of commodities like copper.