AUD Poised for Second Straight Monthly Gain as Rate Hike Bets Rise

The Australian dollar has been steadily rising and is now poised to record its second consecutive monthly gain. The currency's strength is largely attributed to growing expectations of an imminent interest rate hike by the Reserve Bank of Australia (RBA). Markets are currently pricing in a 52% probability of a rate increase as soon as next month, up from just 17% previously.

This shift in sentiment comes after a hotter-than-expected July inflation report and resilient household spending data. Several major banks have revised their forecasts in response to these developments. NAB believes that the RBA may raise rates as early as September 29-30, while CBA and ANZ expect a hike in November but acknowledge the possibility of earlier tightening.

Meanwhile, the US dollar has been gaining strength following Federal Reserve Chair Kevin Warsh's hawkish comments at the Jackson Hole symposium last week. He noted that policymakers may need to take further action if inflation remains elevated, contributing to the broader advance of the greenback.