The Reserve Bank of Australia will raise interest rates by a more modest 25 basis points for a second straight month on Tuesday and is set to do so again in December despite the highest inflation in three decades, a Reuters poll found.

''This puts the RBA - which kicked off its relatively late starting rate-hiking campaign with four straight 50 bp moves - out of step with its global peers, which are mostly still raising rates in larger increments.''

AUD/USD update

The Australian dollar hovers around 0.65, near its highest levels in three weeks vs the greenback. The US dollar was put on the backfoot this week following the Bank of Canada's dovish hike in anticipation that the US Federal Reserve would soon slow down its rate increases.

The Aussie has also found a bid on hotter-than-expected domestic inflation data. For year on year, the consumer price surged 7.3% in the third quarter of 2022 from 6.1% in the second quarter, accelerating at the fastest pace since 1990 and exceeding expectations for a 7% gain. 

• AUD/USD Price Analysis: Bulls need to hold above 0.6435