Aussie Dollar Rises Amid Rate Hike Expectations
The Australian dollar is holding near multi-month highs against both the greenback and euro as investors bet on further rate hikes at home. The Reserve Bank of Australia's (RBA) Assistant Governor Sarah Hunter said the policy board has little tolerance for stronger inflation, hinting that interest rates might rise for a fourth time this year.
Markets now imply a 68% probability that rates will increase by 25 basis points to 4.60% at the next policy meeting on September 29, up from less than 10% a month ago.
The growing evidence of a resilient household sector and spillovers from the data centre boom have contributed to this shift in expectations, according to Luci Ellis, chief economist at Westpac.
The hawkish shift has pushed yields on 10-year bonds to near their highest since mid-2011, with the spread over Treasuries widening to its widest in three months at 43 basis points.