AUD Surges as RBA Rate Hike Odds Rise

The Australian dollar surged to its highest level in nearly three months after hotter-than-expected domestic inflation data forced money markets to price in higher odds of another interest rate hike by the Reserve Bank of Australia.

Australia's consumer price index print for July showed a 1% monthly increase, topping consensus estimates of 0.8%. The RBA's preferred trimmed mean measure accelerated 0.5% on the month to keep annual core inflation elevated at 3.6%, prompting interest rate strategists to aggressively pull forward expectations for a fourth RBA rate increase before year-end.

Broader G-10 currencies, however, traded in tight ranges against a listless U.S. dollar as currency desks sidelined aggressive positions ahead of crucial U.S. inflation data and central bank policy guidance.