Aussie Dollar Surges on Higher Inflation Expectations

The Australian dollar has reached a three-month high after hotter-than-expected inflation data boosted expectations of another Reserve Bank of Australia interest rate hike.

The currency pair hit $0.72 on Friday, its highest level since May 15, and was up about 0.1% at that price.

The strong July monthly consumer price index reading of 1.0%, which beat economists' expectations of a 0.8% increase, also pushed the trimmed mean inflation measure to 3.6% annually.

Markets are now pricing in a 38% chance of an RBA rate hike in September, up from 17% before the inflation report was released.