The Australian dollar strengthened to around $0.714, hitting its highest level since May 2022, boosted by mounting expectations of a rate hike next week. The Reserve Bank’s deputy governor signaled that rising oil prices could push inflation higher, increasing pressure for a rate increase at the March 17 meeting, which the central bank has described as “live” on rates. Markets responded by doubling the odds of a hike to around 65%, with bets for a quarter-point rise in May now fully priced in. Overall, the market is pricing in about 58 bps of tightening this year, which could return the cash rate to the post-pandemic peak of 4.35%, last seen when inflation exceeded 7%. Currently, the headline inflation sits at 3.8% and is expected to surpass 4% as petrol prices continue to climb, while core inflation remains elevated at 3.4%, well above the RBA’s 2–3% target band. Elsewhere, markets remained on edge amid conflicting reports and mounting uncertainty surrounding the Middle East war.