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The Australian dollar advanced past the $0.70 mark on Thursday, reaching its highest point in three years. This surge was largely influenced by rising gold prices and increasing anticipation of an imminent interest rate hike. Recently released inflation numbers exceeded expectations, adding weight to predictions of a 0.25% rate increase as early as next Tuesday. The prior week's unexpected drop in unemployment has also fueled these predictions. Currently, all of Australia's Big Four banks anticipate a hike, with market probabilities exceeding 70%. Rates are expected to reach 3.85% by May and approximately 4.10% by September. Conversely, a few analysts advocate for maintaining existing rates, arguing that the 0.9% quarterly increase in core inflation might not be significant enough to prompt decisive action by the Reserve Bank of Australia (RBA). Meanwhile, gold prices, a significant Australian export, escalated to nearly $5,600 per ounce, thereby strengthening the currency tied closely to commodities. The Australian dollar also gained support from a weakening US dollar, driven by potential US-Japan currency interventions, statements from former President Trump, and widespread uncertainties surrounding geopolitical, trade, and monetary policies.
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