Aussie Dollar Surges as Hawkish RBA Bets Build

The Australian dollar is rising against major crosses due to increased speculation of an imminent interest rate hike by the Reserve Bank of Australia (RBA), following a July inflation report that showed higher-than-expected prices.

The RBA's preferred measure of underlying inflation, trimmed mean inflation, rose 0.5% in July and remains above its target of 2.5%, making it difficult for the bank to argue that current policy settings are restrictive enough to bring inflation back on track within a year.

Cash rate futures now price a significant chance of a hike by November, with September seen as a one-in-three possibility and November at more than 80%.