Australian dollar holds firm as RBA keeps jawboning on hikes

According to Business Recorder, the Australian dollar stayed close to an 11-week high on Tuesday after minutes of the Reserve Bank of Australia's August meeting suggested policymakers were nearer to a rate increase than investors had assumed. The minutes showed several of the nine board members wanted tightening over inflation risks, yet the board held rates steady pending more data. Its next meeting on September 28 and 29 will bring fresh jobs, inflation and growth figures, keeping a hike within reach.

Financial markets, by contrast, assign just a 14% chance to a quarter-point increase from the 4.35% cash rate, a figure that climbs to 68% by December. Three-year bond futures fell 3 ticks, landing at 95.440, while 10-year yields climbed 2 basis points, reaching 5.011%. Those moves helped the Aussie rise 0.1% to $0.7155, after a 0.3% decline overnight and away from a high of $0.7180.

The kiwi stood at $0.5961 after a 0.3% decline in the prior session. The Reserve Bank of New Zealand meets next week, and traders assign a 90% chance to a quarter-point increase from its 2.5% cash rate, with pricing pointing to 3.0% before year end. Westpac economist Imre Speizer said the market view on a 2 September New Zealand hike looks reasonable, adding that the Federal Reserve appears reluctant to begin its own tightening cycle.