Aussie Dollar Hits 4-Year High: 5 ASX Winners and 3 Losers

Aussie Dollar Hits Highs: ASX Stocks in Focus

The Australian dollar has jumped to a 4-year high, climbing to US72.49 cents, its strongest level since June 2022. A weaker US dollar, the RBA’s third interest rate hike to 4.35%, and strong iron ore prices are all pushing the Aussie higher. For ASX investors, this is a big deal. Around 40% of S&P/ASX 200 earnings come from overseas, mostly in US dollars, so a stronger Aussie helps some businesses and hurts others. Here’s how to spot the winners and losers.

What are the Best ASX Stocks to invest in right now?

Why the Aussie Dollar Is Surging

Three things are driving the move. First, hopes of a US-Iran ceasefire deal have weakened the safe-haven US dollar, despite recent naval tensions in the Gulf. Second, the RBA’s hike to 4.35% by an 8-1 board vote means Aussie investments now pay more interest than US ones, which pulls global money into Australian assets. Third, iron ore prices are sitting near a 20-month high, which always lifts the Aussie because Australia is the world’s biggest iron ore exporter. We believe the rally has further to run if the peace deal sticks, but a quick reversal is possible if talks stall.

5 ASX Stocks That Benefit From a Stronger Aussie

Wesfarmers (ASX:WES). Bunnings and Kmart buy a lot of their stock from overseas. A stronger Aussie means cheaper imports, which boosts profit margins and makes WES one of the easiest ways to play this trend.

JB Hi-Fi (ASX:JBH). As an electronics retailer, JBH imports almost everything it sells. The stronger Aussie makes products cheaper to bring in, which directly supports margins in a tough retail environment.

Flight Centre (ASX:FLT). When the Aussie is strong, overseas holidays cost less. That usually leads to a jump in bookings, which is great news for travel agents like Flight Centre.

Nick Scali (ASX:NCK). This furniture retailer imports nearly all its stock from Asia. A stronger Aussie cuts costs straight from the bottom line, helping protect margins in a tough retail market.

Qantas (ASX:QAN). Jet fuel is bought in US dollars, so a stronger Aussie dollar cuts Qantas’s highest single cost. Cheaper international travel also brings in more leisure customers.

3 ASX Stocks That Get Hurt by a Rising Aussie

CSL (ASX:CSL). Around 90% of CSL’s sales come from outside Australia, mostly in US dollars. When the Aussie strengthens, those US dollar earnings shrink in Aussie terms, making CSL the ASX’s most currency-sensitive big stock.

BHP (ASX:BHP). BHP earns its money in US dollars from selling iron ore globally. When the Aussie rises, those US dollar earnings translate into fewer Australian dollars for local shareholders, which weighs on the share price even when iron ore is strong.

James Hardie (ASX:JHX). About 80% of James Hardie’s revenue comes from US homebuilding. Almost all its earnings are in US dollars, so it loses out the most when the AUD rises.

The Investor’s Takeaway

Currency moves are usually short-term, so we wouldn’t trade purely on the AUD. But the rotation is real. A stronger Aussie helps retailers and travel stocks and hurts healthcare and resource exporters. For the trend to continue, the US-Iran peace deal needs to be finalised, and iron ore must hold above US$100 a tonne. Watch any stock with more than 50% of its sales coming from the US.