FX.co ★ Australian Dollar Nears 3-Month High

The Australian dollar is currently trading near $0.664, approaching its highest value in almost three months, buoyed by the Reserve Bank of Australia's (RBA) assertive monetary policy stance. At its December meeting, the RBA maintained the cash rates unchanged, as widely anticipated. However, Governor Michele Bullock surprised the markets with a decidedly hawkish shift, ruling out rate cuts and indicating the possibility of rate increases as early as February if inflation does not moderate. Nevertheless, the RBA stressed the absence of a fixed policy trajectory, with future policy adjustments contingent on inflationary trends. As a result, markets have quickly factored in a 30% probability of a 25 basis point increase at the RBA's February meeting, which climbs to nearly 100% by May. The ascent in local bond yields has attracted carry traders, further boosting the currency. Investors are now turning their attention to Australia's jobs data for November, scheduled for release on Thursday. Globally, markets are also keenly awaiting the US Federal Reserve's policy announcement later today, with expectations leaning towards a 25 basis point reduction.