Australian dollar pauses after blistering rally, rate support intact

Speaking late on Tuesday, Reserve Bank of Australia Deputy Governor Andrew Hauser expected the board to discuss the case for a rate hike at the next policy meeting on September 28-29, adding that he has become more worried now about inflation after his recent trip to the U.S.

After raising rates by 75 basis points this year, the central bank has held them at 4.35% for two consecutive meetings. Yet the economy continues to outperform expectations and inflation pressures remain persistent.

Hawkish comments from Hauser, coupled with higher oil prices, were enough to prompt Goldman Sachs to shift its rate hike call forward to this month from November before.

"We expect the Board to adopt a pre-emptive tightening to avoid falling behind the curve, with a follow-up hike in November a material risk," Goldman analysts said in a note.

Markets also increased bets for a move this month to 4.6% to 75%, from 67% a day earlier. Traders are also ascribing an 80% chance rates will reach 4.85% next year. 0#AUDIRPR