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16.03.202601:27:31UTC+00Aussie Dollar Rebounds on Rate Hike Bets

The Australian dollar strengthened to around $0.70 on Monday, rebounding from the previous week’s losses as investors raised their expectations of consecutive interest rate hikes amid escalating geopolitical tensions in the Middle East. Over the weekend, the United States struck military targets near Kharg Island, Iran’s key oil export hub, and warned it could broaden attacks on energy infrastructure if shipping through the Strait of Hormuz is disrupted. This latest escalation has driven oil prices higher, stoking fresh concerns about inflation. The Reserve Bank of Australia is set to announce its latest monetary policy decision on Tuesday, with markets anticipating a second straight rate increase to 4.1% and pricing in as many as three additional hikes by year-end. That would lift the policy rate to around 4.6%, surpassing the prior peak of 4.35%. If the central bank follows through with another hike, investor attention will quickly turn to its forward guidance on the pace and extent of further tightening.

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