Shortly after 1pm AEST, the Aussie was buying 65.60 US cents, its best performance against the dollar since November 24 last year.

It has since slipped back slightly to about 65.44 cents, as of 4pm – roughly the same as what it was buying at the close of markets yesterday, but still well above the levels seen in the opening months of the year.

The Australian dollar dipped under 60 US cents in April amid the fallout from Donald Trump’s so-called “liberation day” tariffs, but has since rallied.

Today’s year-high watermark was down not so much to the strength of the Aussie, but instead some weakness in the greenback following yet another broadside from Trump towards the chairman of the Federal Reserve, Jerome Powell.

The US president has been constantly attacking his leading central banker – who he appointed during his first term back in 2017 – over the Fed’s reluctance to cut interest rates this year.

After Powell told US Congress that the White House’s tariffs would likely increase inflation and therefore delay any potential rate cut, the president said he is “an average mentally person” and has “low IQ for what he does”.

“I think he’s a very stupid person, actually,” Trump said.

Powell was the only one of Trump’s major first-term appointments who was kept in place and then renewed by Joe Biden, with his term now not expiring until next May.

However, Trump said he was already eyeing off replacements for the Fed chairman.

“I know within three or four people who I’m going to pick, he said, adding that Powell’s term is up “pretty soon fortunately, because I think he’s terrible”.

That led the greenback to hit a more than three-year low on Thursday (US time), with the US dollar index, which measures the dollar’s strength against six major foreign currencies, falling to its weakest level since February 2022. 

Francesco Pesole, a strategist at ING, said that concerns about the Fed’s independence have been one of the contributing factors to the dollar’s broad decline this year.

“One of the key foundations of the strong dollar, of the dollar as a dominant currency globally, is to have an independent central bank,” Pesole told CNN.

“So, if (global investors) feel there is greater influence of politics into the Fed’s decisions, then they are pricing in a greater risk for the dollar.”

– With CNN, Associated Press