The Australian dollar remained near ten-year highs against the dollar ahead of tonight's interest rate decision from the Reserve Bank of Australia. A raft of strong economic news, particularly on the consumption front, has raised expectations that the RBA may lift interest rates again, which would take its key cash rate up to 6.50 pct. Ian Stannard, currency strategist at BNP Paribas, said the market is now pricing in a 60 pct probability of a rate hike from the RBA but warned that the market may be getting a little over-optimistic. This has helped the Australian dollar climbed to 0.8182 usd overnight, its highest level since December 1996. However, Stannard warned about the impact of unchanged Australian rates. "If the RBA leaves rates unchanged, we could see the Aussie reverse and that could have a knock-on impact elsewhere, particularly on the yen," he said. The yen has been particularly badly hit by mounting expectations of higher borrowing costs in Australia, because it has reinforced carry trades, where money is borrowed in countries with low interest rates like Japan to be invested in higher-yielding economies. As a result, the Australian dollar has climbed to 96.73 yen, its highest level since May 1997. "With the consensus (rightly or wrongly) adamant that the Bank of Japan's board meeting on April 10 will reassure over Japan's ultra-low interest rates regime, then on the face of it at least, it is perhaps little wonder that the yen carry trade is alive and well," said Bank of New York currency strategist Neil Mellor. Elsewhere, the pound remained well-supported ahead of the Bank of England's interest rate decision on Thursday, though some profit-taking pushed it towards the bottom end of its trading range against the dollar. Though the AFX poll of economists found only a quarter anticipating a quarter point rate increase in the key repo rate to 5.50 pct, the market is attaching a 50 pct probability. This shift in expectations has helped the pound move up to a high of 1.9822 usd, its highest level for a month. As a result talk of another attempt to break the psychologically important 2 usd level has resurfaced. However, some currency watchers are growing increasingly uneasy ahead of Thursday's rate decision and said much will depend on tomorrow's purchasing managers' index into the services sector, which accounts for around 70 pct of the UK economy. "We are likely to see the pound well-supported but wouldn't be surprised to see some position unwinding ahead of the meeting," said BNP Paribas' Stannard. "People could be getting cold feet," he added. Meanwhile, analysts said much of the US dollar's fortunes in the medium-term will depend on this Friday's crucial US jobs report for March. In the meantime, the main focus today will be US pending home sales data. "A further test (for the dollar) could come from the pending home sales, a lead indicator for the US housing market," ABN Amro currency analyst Peter Frank said. The US property market has been struggling as lending rates have increased and speculators have pulled out of what had been a sizzling sector. Subprime loans, or mortgages marketed to people with poor credit histories, are seeing the worst problems.