(Bloomberg) -- Australia's dollar jumped the most in almost three weeks and three-year bond yields climbed to the highest since 2014 as traders boosted bets on higher interest rates.
The Aussie climbed as much as 1% to 76.18 U.S. cents, the strongest since June, after the Reserve Bank of Australia scrapped a reference to remaining “patient” on policy in its post-meeting statement.
Traders are now pricing in a 57% chance of a rate hike in May, compared with 50% odds on Monday, futures markets show. They have also started betting the cash rate will be at 2% by year-end, from 0.1% now.
“The RBA's dovishness is waning,” Marcel Thieliant, senior Australia & New Zealand economist at Capital Economics, wrote in a research note. “We're confident in our forecast that the bank will start to lift interest rates in June.”
The yield on Australia's three-year bonds surged as much as 12 basis points to 2.50%, a level last seen in November 2014. Ten-year yields climbed two basis points to 2.86%.
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