FX.co ★ Aussie Dollar Rises on Rate Hike Bets

The Australian dollar advanced to approximately $0.661 on Thursday, reaching its strongest position in two months, following the release of more robust-than-anticipated economic data that reinforced the likelihood of an interest rate increase in the coming year. Household expenditure, which constitutes over half of Australia's economic output, expanded by 1.3% in October, surpassing the 0.6% prediction, and representing the most significant rise since January 2024. On an annual basis, consumption increased by 5.6%, exceeding the forecasted 4.6%. Following three rate reductions since February that brought borrowing costs down to 3.6%, it is widely anticipated that the Reserve Bank will maintain rates at current levels during next week's assembly. The markets, however, are factoring in a potential rate hike in 2026, spurred by a notable rise in inflation during the third quarter. Furthermore, the nation's trade surplus grew to AUD 4.39 billion in October, exceeding expectations, driven by a two-year high in exports, primarily due to non-monetary gold shipments, while imports also experienced growth amid strong internal demand.