AUD Extends Winning Streak as Rate Hike Bets Skyrocket

The Australian Dollar (AUD) continued its upward momentum for the fourth consecutive session in Asian trading on Friday, with the AUD/USD pair hovering near 0.7200.

This rally is largely driven by investors' strengthening expectations of tighter policy from the Reserve Bank of Australia (RBA), following a stronger-than-anticipated July inflation report.

Market pricing has shifted accordingly, with roughly a 50% chance now assigned to a rate hike at the RBA's September meeting, up from 17%, and fully pricing a policy move in November. This shift is reflected in the forecasts of several major domestic institutions, including National Australia Bank (NAB), Commonwealth Bank of Australia (CBA), and ANZ.

While the Federal Reserve Chair Kevin Warsh's upcoming address at Jackson Hole may provide clues on the direction of U.S. monetary policy and interest rates, strategists at Societe Generale argue that as long as US growth holds up and bond yields remain contained, higher-yielding currencies like the AUD will continue to perform well.