AUD Trapped Between Hawkish RBA and US-Iran Inflation Risks
The Australian Dollar continues to trade around 0.7055 on Thursday, supported by the Reserve Bank of Australia's hawkish stance and resilient US Dollar.
The RBA left its key interest rate unchanged at 4.35% this week, maintaining a cautious bias towards inflation. Governor Michele Bullock indicated that the Board had discussed raising rates again if price pressures don't ease sufficiently.
However, markets assign only a 21% chance of a 25-basis-point hike at the RBA's September meeting, while the US Dollar's upside is limited by reduced expectations of an interest rate hike by the Federal Reserve.
Tensions between the United States and Iran continue to fuel inflation risks through energy prices, capping gains in AUD/USD. The pair consolidates after surpassing 0.7090 on Wednesday, caught between support for the Australian Dollar and resilience in the US Dollar.