The Australian dollar has hit a new five-month high after the September quarter inflation rate came in much stronger than expected.
At 1200 AEDT on Wednesday, the Australian dollar was trading at 97.45 US cents, up from 96.55 cents on Tuesday.
After the inflation data was released, the currency peaked at 97.50 US cents, its highest since June 4.
Australia's headline consumer price index (CPI) rose 1.2 per cent in the September quarter, for an annual rate of 2.2 per cent, according to official figures released on Wednesday.
Commonwealth Bank currency strategist Peter Dragicevich said the higher inflation figure had caused some investors to believe the Reserve Bank of Australia wouldn't cut the cash rate in the foreseeable future.
"The headline CPI was stronger than expected and that was largely driven by fuel prices that picked up because of the relative fall in the currency in the third quarter," he said.
"The higher CPI did drive up the Aussie dollar. I think that was because people are re-evaluating their expectations for for the RBA, they expecting that we may be at the low point of the interest rate cycle."
Mr Dragicevich said the Australian dollar was also getting support from US dollar weakness following the disappointing American employment figures for September, released overnight.
The nonfarm payrolls report showed the US economy added 148,000 jobs in September, well below the gain of 180,000 the market was expecting.
The data increased expectations the US Federal Reserve won't wind back its economic stimulus program until next year.
Mr Dragicevich expects the Australian dollar to trade in a range between 97.00 and 98.00 US cents on Wednesday afternoon.
Meanwhile, bond futures prices were higher.
At 1200 AEDT on Wednesday, the December 10-year bond futures contract was trading at 95.990 (implying a yield of 4.010 per cent), up from 95.925 (4.075 per cent) on Tuesday.The December three-year bond futures contract was at 96.900 (3.100 per cent), up from 96.880 (3.120 per cent).