As market expectations for a Reserve Bank of Australia (RBA) rate hike next Tuesday continue to intensify, foreign exchange traders are significantly increasing their bullish Australian dollar positions in the options market. According to the latest data from the CME Group's Options Central Limit Order Book, the trading volume of Australian dollar call options on Thursday reached three times that of put options. Earlier this week, a key shift was observed in the risk reversal indicator—the premium traders pay to bet on a rising Australian dollar has become significantly higher than the premium for betting on a decline, marking the first such occurrence since 2018. This indicator serves as a core monitoring tool in the options market, primarily used to quantitatively compare the relative price levels of call options versus put options. "Given the recent strong employment and inflation data, the probability of an RBA rate hike has increased further, driving up demand for long AUD/USD positions," said Mayank Navalkar, Global Head of FX & Precious Metals Options at ANZ Group. He also noted that investors are showing strong interest in option structures that would benefit from an appreciation of the Australian dollar against the New Zealand dollar. Driven by persistently high inflation, the Australian dollar is approaching its highest level since 2023, with the RBA poised to potentially become the first major central bank to hike rates this year. Pricing in the swap market indicates a 71% probability of a 25-basis-point rate hike by the RBA on Tuesday. Following U.S. President Trump's comment that he is "not worried about dollar depreciation," the Australian dollar has ranked among the top three performers this year within the Group of Ten currencies. Simultaneously, rising commodity prices are providing additional support for the currency. "The Australian dollar enjoys multiple supportive factors," said Richard Franulovich, Head of FX Strategy at Westpac. Given the current backdrop, he believes it is "highly probable" that the AUD/USD exchange rate could reach 75 U.S. cents within a six-month timeframe. At the time of writing, the AUD/USD exchange rate fell 0.7% to 70 U.S. cents (approximately 0.70 USD), following a nine-session consecutive rally prior to this decline.