AUD Maintains Strength Near $0.7220 Amid Hawkish Signals

The Australian dollar has maintained its strength near highs around $0.7220 against the U.S. dollar, but its upside potential remains constrained by expectations of U.S. rate hikes and shifts in global risk sentiment.

RBA Deputy Governor Michele Bullock emphasized that inflation is the 'single big issue' driving persistent inflation, citing a 'three-headed monster' made up of conflicts in the Middle East, an AI-driven global boom, and domestic supply constraints.

Bullock stopped short of declaring a rate hike 'inevitable,' leaving the decision to the RBA Board and emphasizing whether 'enough has been done.'

The four major banks expect another 25 basis point hike by year-end, bringing the cash rate to 4.6%, following three previous rate hikes since the beginning of the year.