AUD Holds Firm As Markets Price RBA Rate Hike

The Australian dollar is holding near a four-month high as investors increasingly expect the Reserve Bank of Australia (RBA) to raise interest rates later this month.

Markets are now pricing in an 80% chance of an RBA hike, with the cash rate expected to peak near 4.85% by early next year, according to Reuters.

Australia's central bank has sounded more concerned about inflation lately, and higher oil prices are adding to that pressure.

Bond markets have already moved in anticipation of the RBA hike, with Australia's three-year government yield rising to 4.905%, close to its highs from earlier this year.