Bank of America Global Research previews the September RBA policy meeting.

"We expect the RBA to raise the cash rate at its upcoming meeting to 4.60%, with risks of further hikes this year amid persistent inflationary pressures. Inflation risks remain skewed to the upside given the higher starting point for inflation in Australia and the risk of second-round effects from energy market disruptions in the Middle East. As a result, we expect the cash rate will need to remain higher for longer, such that Australia retains the highest policy rate among G10 central banks amid persistent core inflation, which should underpin AUD strength," BofA notes.

"We are bullish AUD given elevated Australian Commonwealth Government Bond (ACGB) yields and resilient commodity prices. The key downside risk is a stronger US macroeconomic backdrop that leads markets to price in further Fed tightening. Commodity export prices should continue to offer some support for AUD, although the impact will likely be modest in the absence of new mining capex," BofA adds.