AUD Slides on Hawkish Fed Bets as Oil Prices Soar Above $100

The Australian dollar declined by 0.80% against the US dollar on Thursday due to increased expectations of a more hawkish Federal Reserve outlook following hotter-than-expected US producer inflation data.

The August PPI rose 0.4% month-on-month, with core PPI increasing 0.2%. The annual headline rate edged up to 5.4%, beating forecasts of 5.3%. Money markets now price a 71% chance of a 25-basis-point Fed rate hike.

The US dollar index (DXY) gained about 0.30%, reaching 99.09, while oil prices surged as the conflict between the US and Iran escalated, with Brent and WTI crude benchmarks rising above $100 per barrel.