Australia’s economy expanded faster than estimated last quarter, which has bolstered the central bank’s case for raising interest rates by 40 basis points at its meeting on Tuesday, swaps prices show. The country, an exporter of wheat, could also benefit from uncertainty over supply of the grain from Ukraine and India, and from a rebound in iron ore prices as China loosens its Covid restrictions.

The Aussie held steady at 72.08 US cents in early Asia trading on Monday.

Foreign-exchange analysts, expecting a resurgence of risk-taking, are ramping up bets on the Aussie as rallies in haven currencies lose steam. The Aussie is the second best-performing among its Group-of-10 peers so far this year, after the Canadian dollar.

Global investors are growing increasingly jittery as markets navigate a world of rising interest rates, soaring inflation and the impact of China’s Covid-zero policies on the world economy. Some are also on edge over whether the Federal Reserve’s tighter policies will cause a recession.

In an environment where possibly too many interest rate hikes have been priced in and investors look to pare back some expectations, the least pricing out will happen in commodity-linked economies, which gives them an edge, Schnider said. BM