AUD Strengthens on Hot Inflation Data as USD Consolidates

The Australian Dollar (AUD) has strengthened for the second consecutive day following the release of hot Consumer Price Index (CPI) data, which saw a higher-than-expected reading of 3.5% year-over-year in July.

The increase in inflation, although lower than the previous month's 3.8%, suggests that the Reserve Bank of Australia (RBA) may continue to tighten monetary policy, supporting the AUD.

Meanwhile, the US Dollar (USD) has consolidated amidst declining US bond yields and hopes for US-Iran diplomacy, reducing its appeal as a safe-haven asset.

The AUD/USD pair has climbed to the 0.7170 area, nearing its highest level since early June, with traders now looking towards the upcoming release of the US Personal Consumption Expenditures (PCE) Price Index for further cues.