The risk-sensitive Australian dollar was one of the strongest major currencies on Monday, second only to the New Zealand dollar, as commodities and equities gained. The currency faces big event risk tomorrow evening as the Reserve Bank of Australia (RBA) is anticipated to leave their cash rate target unchanged for the sixth straight month at 3.00 percent. As it stands, Credit Suisse Overnight Index Swaps (OIS) are pricing in a 60 percent chance of a 25 basis point rate hike during this upcoming meeting - which we think to be highly unlikely - and 175 basis points worth of hikes over the next 12 months, which is generally in line with what we’ve seen since early August. It was actually in early July when the RBA’s bias shifted from dovish to neutral, as Stevens removed a line from his statement noting that “scope remains for some further easing of monetary policy.” As long as we see these RBA statements continue to provide progressively optimistic outlooks, the markets are likely to remain in favor of large rate increases over the next year. However, this aggressive speculation in favor of hikes in the very near-term may set the stage for market disappointment, especially if the RBA strikes a decidedly neutral tone. In the end, this may be one of those events in which its best to “buy the rumor and sell the news.”