The Australian dollar inched up on Friday, but traders said a rally which took it to 14-month highs earlier this week was showing signs of tiring as speculators reassessed extended long positions on the Aussie. The Aussie was at $0.9276, up from $0.9253 seen late here on Thursday and off a 14-month high of $0.9330 struck earlier this week.
It has risen nearly 1.5 percent this week and remains one of the best performing currencies. "Speculators' positioning appears to have reached a plateau, while current interest rate market pricing for the future path of the cash rate looks too aggressive," said Amber Rabinov, currency strategist at ANZ.
Implied cash rates, based on money market and swap rates, are fully pricing in a 25 basis point hike and factoring in a 30 percent chance the central bank will raise rates by 50 basis points on November 3. Over the next 12 months, investors are pricing in nearly 220 basis points of rate hikes.