The Australian dollar traded around $0.7 on Wednesday, hovering near a three-year high, after a hotter-than-expected inflation print boosted expectations of a rate hike by the Reserve Bank next month. Data showed annual inflation rose to 3.8% in December, above the expected 3.6% and November’s 3.4%, while monthly inflation also exceeded expectations at 1.0% from 0.7%. The closely-watched core inflation also remained elevated, with the trimmed mean gauge up 0.9%, outpacing the 0.8% forecast and lifting the annual rate to 3.4%, well above the central bank’s 2-3% target range. The data come alongside a surprising fall in unemployment last week, suggesting the economy is running hotter than expected and with little spare capacity. Traders quickly pushed odds for a quarter-point rate hike to around 72% at the upcoming February 3 meeting, up from 63% before the CPI release. Elsewhere, the US dollar continued to struggle after Trump downplayed its recent decline, fueling further weakness.