AUD Soars as RBA Hawkishness Combines with Weaker US Data

The Australian Dollar (AUD) gained ground against the US Dollar (USD) for the second consecutive day, reaching around 0.7090 during Asian hours on Monday. The appreciation of AUD/USD was largely due to the Reserve Bank of Australia's (RBA) hawkish policy stance, which maintained a firm tone and left the door open for further action if needed.

RBA Governor Michele Bullock declared that the bank would not hesitate to act if necessary, underscoring its readiness to tighten policy further. Analysts at SocGen noted that the RBA's statement was hawkish, while Rabobank's strategy team remains unconvinced that the current policy stance will be sufficient and continues to expect one more hike later this year.

The US Dollar declined amid weaker-than-expected US economic data and shifting central bank expectations. The US Census Bureau reported a 0.6% month-over-month fall in Retail Sales in July, below market consensus of 0.1% growth. As a result, traders reduced their bets on Federal Reserve rate hikes, with markets now pricing in a 33.1% chance of a hike next month.