AUD Falls Despite RBA Hawkish Stance Amid Hotter US Inflation

The Australian Dollar (AUD) has been falling against the US Dollar despite a hawkish stance from the Reserve Bank of Australia (RBA). The AUD/USD pair edged lower to around 0.7155 during the early Asian session on Friday.

The US Dollar strengthened against the Australian Dollar following signs of hotter inflation in the United States, with the release of the US August Consumer Price Index (CPI) inflation data due later that day.

The US Producer Price Index (PPI), a measure of wholesale prices and a gauge of pipeline cost pressures, rose 5.4% YoY in August, above market consensus of 5.3%. This figure came in above the prior reading of 4.8%

RBA Assistant Governor Sarah Hunter stated that the central bank may need to raise interest rates again if inflation proves more persistent than expected, keeping alive the prospect of another hike at its September meeting.

The RBA's policy stance has turned more hawkish after Deputy Governor Andrew Hauser gave a hawkish speech, which markets are interpreting as hikes this month and in November. This aligns with US policy preferences for firmer restraint beyond the housing sector.