AUD Hits Four-Month Highs as China Inflation Data Boosts Confidence
The Australian Dollar (AUD) has hit fresh four-month highs against its US counterpart as the Greenback continues to lose ground. The AUD/USD pair peaked at 0.7237 before retreating to around 0.7220, driven by a weak US Dollar and strong Chinese inflation data. Economists at DBS believe that this week's Consumer Price Index (CPI) figures will be pivotal for the Federal Open Market Committee (FOMC) meeting next week.
Despite a dismal market mood, the AUD has drawn support from China's rebound in consumer inflation, which beat expectations with a 0.4% increase in August. Year-over-year, Chinese CPI accelerated to 0.8%, in line with market forecasts. This news has eased concerns about domestic demand and boosted investor confidence.
The Australian Dollar is also benefiting from the Reserve Bank of Australia's (RBA) stance on inflation, with RBA Deputy Governor Andrew Hauser calling for more action on inflation. Rabobank analysts believe that this prospective tightening will support a firmer near-term outlook for the AUD, aligning with US policy preferences.