AUD Holds Firm as Hotter US Inflation Fails to Cement Greenback's Advantage

The Australian Dollar (AUD) is maintaining its ground despite hotter-than-expected US inflation data. The US core Consumer Price Index (CPI) rose 0.3% in August, above the 0.2% consensus.

Typically, such an inflation print would weigh on the AUD, but it's not having that effect today. Instead, the pair is edging higher and trying to retake the 0.7200 mark.

The US Dollar (USD) has struggled to gain traction despite a firmer-than-expected inflation print. The 2-year US Treasury yield rose to around 4.62% and the 10-year yield remains near its highest level since 2023, but the USD's advantage is being held back by a growing policy premium.

Energy prices remain an inflation risk, with Brent Crude above $107 a barrel due to continued disruption in the Strait of Hormuz. The International Energy Agency (IEA) expects the global oil supply deficit to worsen this year and not recover until next year.