FX.co ★ Australian Dollar Set for Modest Weekly Gain

The Australian dollar stabilized at approximately $0.669 against the US dollar on Friday, heading towards modest weekly gains. This stability was bolstered by renewed expectations of a potential interest rate hike from the Reserve Bank of Australia (RBA). On Thursday, the Commonwealth Bank of Australia increased its owner-occupier mortgage rates by up to 0.7 percentage points, raising its lowest two-year fixed rate to 5.79%. Following suit, Macquarie Bank implemented a 0.25 percentage point hike across all fixed loan terms. These adjustments come in the wake of similar rate hikes by other major Australian banks in December, highlighting growing anticipation that the cash rate might stay elevated for an extended period. Currently, markets are predicting a 27% probability of a quarter-point rate rise at the RBA's February meeting, with expectations surging to approximately 76% by May. Additionally, further support for the Australian dollar was derived from an upswing in global stock markets, especially Australian equities, which surged for the fifth consecutive session, nearing a two-month high.