FX.co ★ Aussie Marches Toward 4-Month High

The Australian dollar climbed above $0.72, approaching a four-month high, as increasingly hawkish signals from the Reserve Bank of Australia (RBA) strengthened expectations of another interest rate hike this month. Deputy Governor Andrew Hauser said late Tuesday that the central bank will actively consider raising rates at its September meeting, pointing to persistently elevated inflation and upside risks. Assistant Governor Sarah Hunter likewise noted that the RBA has very limited tolerance for stronger inflation and may need to deliver a fourth rate increase this year. The bank has already lifted its cash rate three times in 2026, as surging oil prices stemming from the Gulf conflict have pushed inflation higher.

Financial markets are now assigning a 74% probability to a 25-basis-point hike at the September 29 meeting, a sharp rise from less than 10% a month earlier, while a further move in November is fully priced in. In addition, stronger trade data from China lent further support to the Australian dollar, often viewed as a proxy for China-related exposure, given that China is Australia’s largest trading partner.