AUD Surges Past June High on Weak USD and Hawkish RBA
The Australian Dollar (AUD) surged past its previous high of June 5, reaching a fresh peak as the US Dollar (USD) continued to weaken. The AUD/USD pair attracted strong buying interest at the start of the week and climbed above the 0.7100 mark.
The USD's decline was fueled by the National Bureau of Statistics' report that China's Retail Sales rose only 0.6% year-over-year in July, falling short of expectations. Additionally, China's Industrial Production grew 4.5%, below consensus estimates, and Fixed Asset Investment declined by 6.7% year-to-date.
Meanwhile, the US Dollar Index (DXY) dropped to a two-month low due to reduced bets for an immediate interest rate hike by the Federal Reserve (Fed). The US inflation data showed moderating price pressures, while Retail Sales fell 0.6% in July, marking its largest month-over-month decline since May 2025.
The AUD's strength was also attributed to the Reserve Bank of Australia's (RBA) hawkish stance, suggesting that the path of least resistance for the AUD/USD pair is upward. This outlook supports the case for an extension of the recent uptrend from June's swing low near 0.6845.