Oct. 20 (Bloomberg) -- The Australian dollar climbed to the highest in six weeks as traders added to bets the central bank will increase the benchmark interest rate.

The currency has advanced every day since Oct. 11, when Reserve Bank of Australia Governor Glenn Stevens said he was more likely to lift the overnight cash rate target from 6 percent than cut it. In that time, the probability of a quarter-point rate increase rose to 77 percent from 47 percent, according to an indicator calculated by Credit Suisse and based on trading in overnight interest-rate swaps.

``The market had been anticipating there was probably going to be another rate rise,'' said Nick Bennenbroek, vice president of foreign-exchange research at Brown Brothers Harriman & Co. in New York. ``When Mr. Stevens spoke, it consolidated those expectations'' and boosted the currency.

Australia's dollar headed for a third weekly rise, trading at 76.01 U.S. cents at 5:15 p.m. in Sydney from 75.10 cents in New York Oct. 13 and 75.70 cents in late Asian trading yesterday. It reached 76.05 cents, the strongest since Sept. 8.

``The Australian dollar overcame a reasonably significant hurdle by rising above the late September high of 75.80 cents, which will pave the way for significant gains,'' Bennenbroek said.

Eighteen of 25 economists surveyed by Bloomberg News expect the central bank to increase the rate on Nov. 8. Governor Stevens said he would look for guidance from the consumer prices report due Oct. 25.

`Something Beyond'

Prices rose 4 percent in the year to June, according to the previous report published in July. The central bank has an inflation target of between 2 percent and 3 percent.

``Core inflation is likely to be higher, even if the headline number eases, so there is going to be more buying pressure'' for the currency, said Toby Davis, a senior currency dealer in Sydney at Custom House Global Foreign Exchange. ``A November rate rise is priced in and people are starting to price in something beyond.''

The rise in oil and gold prices also helped the Australian dollar, Davis said. Gold and petroleum oils were the third- and fourth-most valuable Australian commodity exports after coal and iron ore in the six months to June.

Good Combination

Gold for immediate delivery rose 2 percent to $600.95 and crude oil for November delivery rose as much as 1.5 percent to $59.40 a barrel in after-hours electronic trading on the New York Mercantile Exchange.

``The Australian dollar rose on a combination of increased rate expectations and the strong upward move in commodity prices,'' said Stephen Halmarick, co-head of economics and market analysis at Citigroup Australia in Sydney. ``There's a recognition the bearishness about the global economy was overdone.''

The Australian dollar also gained as the U.S. dollar yesterday fell the most in four weeks against the euro and the yen after a report showed manufacturing in the Philadelphia region unexpectedly contracted for a second month in October.

The Fed Bank of Philadelphia's general economic index fell to minus 0.7 this month from minus 0.4 in September, which was the first contraction in the gauge since April 2003. Readings below zero signal a decline.

``The Philadelphia Fed headline was disappointing and we got the biggest move of the week as far as the U.S. dollar was concerned,'' Bennenbroek said.

The yield on the Australian government 10-year bond rose 3 basis points to 5.75 percent. A basis point equals 0.01 percentage point. The price of the 6 percent bond maturing in February 2017 fell 0.219, or A$2.19 per A$1,000 face amount, to 101.945. Bond yields move inversely to price.

To contact the reporter on this story: David McIntyre in Sydney at dmcintyre2@bloomberg.net.

Last Updated: October 20, 2006 03:18 EDT