AUD Holds Firm as Hotter US Inflation Fails to Boost Greenback
The Australian Dollar has maintained its strength despite hotter-than-expected US inflation data. The core Consumer Price Index (CPI) in August rose by 0.3%, beating forecasts, and increased the likelihood of a Federal Reserve rate hike next week. However, this did not translate into a significant gain for the US Dollar, as investors remain cautious about policy decisions.
The AUD/USD pair has been trading near recent highs, with the Aussie holding its ground despite the higher-than-expected inflation data. The 2-year US Treasury yield rose to around 4.62%, while the 10-year yield remains above 4.90%. Energy prices continue to be a concern, with Brent Crude exceeding $107 per barrel amid disruptions in the Strait of Hormuz.
The International Energy Agency (IEA) has warned that global oil supply deficits are set to worsen this year, with inventories down by 95 million barrels last month. The near-term catalyst for market movements is next week's Fed decision, which will determine the fate of interest rates and the US Dollar.