AUD/USD Rallies Over 0.80% as Persistent Inflation Boosts RBA Hike Bets

Key Facts

The AUD/USD pair rallied by more than 0.80% on Wednesday following the release of Australia's January inflation report, which showed consumer prices remaining at elevated levels. The pair traded at 0.7118 after bouncing off daily lows of 0.7057, reflecting strong bullish momentum. Both headline and trimmed mean inflation exceeded market consensus, signaling that price pressures in the economy are more persistent than anticipated. In response to these figures, the Global Strategy Team at TD Securities now expects a further interest rate hike from the Reserve Bank of Australia (RBA). This data has led market participants to recalibrate their expectations toward a more hawkish monetary policy path to curb inflation. While the prospect of higher rates provides fundamental support for the Australian Dollar, it may weigh on domestic equities such as the ASX 200.