Commodity prices to drive Australian dollar in 2018: economists

It's both "typical" and "counter-intuitive" for the Aussie dollar to climb against the greenback when the Fed begins hiking rates, and it's commodity prices that are likely to drive the currency in the year ahead, economists say.

Local 10-year rates at 2.77 per cent now sit around 9 basis points, or 0.09 percentage points, below their American equivalents at 2.86 per cent, according to Bloomberg data. Aussie rates sit below US rates through the entire yield curve out to 10 years.