AUD Stengthens as RBA Officials Maintain Hawkish Tone

The Australian Dollar (AUD) strengthened on Friday after Reserve Bank of Australia (RBA) officials maintained their hawkish stance. RBA Governor Michele Bullock testified before a parliamentary committee, stating that inflation remains 'too high' and that some upside risks to prices are materializing.

Bullock's comments were echoed by Deputy Governor Andrew Hauser, who expressed concern about the sufficiency of monetary tightening delivered so far in returning inflation to target within a reasonable timeframe. This leaves the door open for further interest rate hikes.

The RBA currently keeps its policy rate unchanged at 4.35%, but markets expect another increase to 4.6% at the next meeting. The strength of the US Dollar (USD), however, remains a challenge to the upside potential for AUD/USD.