AUD Surges on RBA Hawkish Comments and Fed Rate Hike Bets

The Australian Dollar (AUD) strengthened on Friday after Reserve Bank of Australia (RBA) Governor Michele Bullock warned that persistent inflation may force another interest rate hike in September.

Bullock's comments reinforced market expectations for a fourth rate hike this year at the RBA's late-September meeting. Deputy Governor Andrew Hauser reaffirmed the Board's commitment to its 2-3% inflation target.

Analysts at UBS now project two additional hikes, bringing the terminal interest rate to 4.85%. However, strategists at UOB Group maintain a bearish medium-term bias on the Aussie, expecting it to drop to 0.7050 if it breaks below 0.7140.