The Australian dollar rose to its strongest level in three years, with the market viewing it as a high-yield safe-haven currency.

The Australian dollar is approaching its strongest level in three years, as the Reserve Bank of Australia maintains a hawkish stance, and the possibility of the US and Japan teaming up to defend against threats to the yen continues to suppress the US dollar. The Australian dollar against the US dollar has risen by nearly 4% in 2026, reaching around 0.69 US dollars, making it one of the top three performing G10 currencies this year. According to strategists from the Commonwealth Bank of Australia and Westpac, the Australian dollar against the US dollar could climb to 0.70 US dollars by the end of March, a level last seen in early 2023. One key support for the strength of the Australian dollar is that Australian government bonds offer higher yields than other developed economies, with the market betting that Australia will raise interest rates next month. Rising bond yields have also led to the widest spread between US and Australian bond yields since 2022, which is favorable for the strength of the Australian dollar. This interest rate advantage provides a buffer for the Australian dollar against global market volatility. Kit Juckes, Chief FX Strategist at Societe Generale, predicts that the currency will rise to 0.70 US dollars by mid-year. "In a time when the US dollar is no longer trusted, the euro is strong but fragile, and the yen is cheap but unsettling, the Australian dollar can be seen as a higher-yielding safe haven currency," Juckes said, adding that the Australian dollar is "my favorite currency at the moment."