The Australian currency continued to trade near a two-year high on Tuesday noon as a hawkish Australian interest rate outlook offset profit-taking.

Investors see a near 70 percent chance the Reserve Bank of Australia (RBA) will lift rates from 4.5 to 4.75 percent at its Oct 5 policy meeting.

At 1200 AEST, the domestic dollar was at 96.02 US cents, up 0.14 US cents from Monday's local close of 95.88 cents.

In early trade, the Aussie reached 96.44 US cents, its highest since July 2008, but started to consolidate towards noon.

Since 7am, it changed hands between 95.87 US cents and 96.15 cents.

The ''Aussie'' could reach parity with the US dollar given the strong domestic economic outlook, according to Nomura Australia chief economist Stephen Roberts.

''The factors which are supporting the Australian dollar look as they're going to persist over at least the next few weeks.''

''These include interest differential support, it includes the strength in terms of trade and the strength of global demand in our part of the world.''

Mr Roberts said speculation that the US Federal Reserve Bank may stage quantitative easing measures to help the ailing US economy has pushed the Australian currency even higher.

''That's almost a 180 degree opposite of what will be happening here, which is a further slow tightening of monetary conditions to ensure the economy doesn't grow too fast,'' he said.

Traders are predicting the local currency to trade around its current levels in the absence of any domestic data.