The Australian currency finished near a two-year high on Monday, its high-yield appeal clearly working in its advantage amid growing speculation the Reserve Bank of Australia (RBA) may lift domestic rates as soon as next week.

At the local close, the dollar was trading at 95.88 US cents, almost 1 cent higher than Friday's finish of 94.94 US cents. The Aussie earlier reached 96.24 US cents, the highest since July 2008.

The local unit was supported by expectations that the Reserve Bank of Australia would increase rates next week or in the coming months, according Westpac chief currency strategist Robert Rennie.

''Australia has tremendously attractive yields and that clearly are the driver of the Aussie dollar,'' Mr Rennie said.

The market is priced for a 64 percent chance the RBA may lift rates to 4.75 percent at its next policy meeting on Oct 5, from 4.5 percent now, owing to a robust economy that is driven by a trade boom.

Australia's cash rate compares to the zero to 0.25 per cent rate in the US, the 1 per cent rate for the euro area and 0.1 per cent in Japan.

''You look around the G20 (group of 20 nations) and you ask which other bond market offers the yields on offer in Australia, and the answer is very few,'' Mr Rennie said.

The hawkish domestic rate outlook contrasts sharply with the rate outlook in the United States, where investors believe the central bank may further ease super-loose monetary policy by undertaking more quantitative easing.

Mr Rennie said the Australian dollar was unlikely to ease below 95.50 US cents while it would find it difficult to get far above 96.60 cents.