US Dollar Sells Off Sharply, Boosting Australian Dollar to 15-Month Peak

The Australian dollar has received a boost from the US dollar sell-off overnight, rising 0.3% to 67.36 US cents. Earlier this month, it climbed as high as 67.66 US cents (on January 7 to be precise). But if we look through that, the local currency is trading around its highest level since October 11, 2024. In other words, the Aussie dollar is trading near a 15-month high (or its strongest in more than a year). So that's great if you're travelling overseas to the United States for a holiday (or another country that uses US currency), but not so great if you run an export business which is trying to sell goods to America at more competitive rates. The US dollar index, on the other hand, dropped 0.8% overnight. In case you're wondering, that index is a way of tracking the value of the US greenback against a basket of major currencies (including the euro, Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc). The difference is even more stark when you compare the US and Australian dollar's performance over the past 12 months. While the Aussie dollar is up 8.7% over the past year, the US dollar index is down almost 10% in that time. Gold prices have surged past $US4,700 an ounce for the first time ever as escalating geopolitical tensions between the US and Europe boosted safe-haven demand, while silver also climbed to a record high. Spot gold gained about 2% to $US4,755 per ounce, after reaching as high as $4,766 overnight. "Gold has surged deeper into uncharted territory as investors hedge against rising political risk," said Fawad Razaqzada, market analyst at City Index and FOREX.com. "A softer dollar is providing an additional tailwind for precious metals, reinforcing gold's rally at a time when confidence in US assets appears to be wobbling." Wall Street's main indexes dropped to a one-month low as investors were spooked by renewed tariff threats from Donald Trump against eight European countries over his plans to take control of Greenland. The remarks have heightened tensions ahead of the US President's expected meeting with global business leaders in Davos, Switzerland, on Wednesday (local time). Rate cut expectations also driving gold higher The US dollar was set for its largest daily fall in over a month, making greenback-priced gold more affordable for overseas buyers. Gold, seen as a safe store of value during economic and political instability, soared 64% last year and has added another 10% since the start of the year. The metal's rally has also been supported by expectations of US interest rate cuts, which reduce the opportunity cost of holding non-yielding bullion. Markets are pricing in two rate cuts of 25-basis-points from mid-2026, while focus intensified after US Treasury Secretary Scott Bessent said President Trump could name a new Federal Reserve chair as early as next week. Spot silver slipped 0.7% to $93.95 an ounce, after hitting a record $US95.87 overnight. The white metal added about 147% in 2025 and has gained more than 32% since the start of this year. - with Reuters Good morning and welcome to the ABC's finance blog! I'll be your guide for the next few hours, in what could be an ugly day on the markets. The 'sell America' trade is in full swing with stocks on Wall Street sinking to a one-month low, the US greenback down, and the price of US Treasury bonds falling (which have sent yields higher as investors demand a higher return from US debt). This sell-off coincides with US President Donald Trump's repeated threats to take over Greenland one way or another — and his decision to impose additional tariffs on goods from Denmark, Norway, Sweden, France, Germany, the Netherlands, Finland and the United Kingdom due to their opposition to his territorial ambitions. US importers will be hit with a further 10% tariff on goods from those European countries from February 1. Mr Trump says that rate will increase to 25% on June 1 if Greenland still has not been sold to the US by then. Gold surges, ASX to fall Gold has also jumped to a new record high as worsening relations between the United States and Europe are boosting demand for the safe-haven metal. European share markets also slumped, along with the price of bitcoin (which is being sold off like a speculative tech stock, rather than a 'safe haven' asset). Against this backdrop, the ASX is on track to open lower for its third day in a row. ASX futures are pointing to a 0.6% drop for the Australian share market when trading begins in a few hours. The Australian dollar, on the other hand, has risen to 67.3 US cents. That's around its highest level in more than a year as a weaker US dollar has boosted the local currency. Anyway, sit back, try to relax, grab a coffee (or tea), and I'll have more updates for you shortly!