The Australian dollar traded just above $0.72, hovering near multi‑month highs as increasingly hawkish signals from the Reserve Bank of Australia (RBA) strengthened expectations of another rate hike this month. RBA Assistant Governor Sarah Hunter stressed that the board has little tolerance for inflation remaining above target for an extended period and indicated that interest rates may need to rise further if price pressures prove stronger than anticipated.
Money markets now assign roughly a 69% probability to a 25-basis-point increase to 4.60% at the September 29 meeting, up sharply from less than 10% a month earlier, while a further move in November is fully priced in. The Australian dollar also drew support from broad US dollar weakness and extended its advance against the euro, which fell to a near two-year low.
Still, domestic headwinds curbed additional gains. NAB business conditions dropped to a six-year low in August, while consumer sentiment slumped in September amid mounting concerns over higher borrowing costs, rising fuel prices, and a deteriorating housing market.
