AUD/USD Bounces Off Lows as US Inflation Data Fails to Boost Dollar

AUD/USD is trading modestly higher on Friday, recovering part of its previous session's sharp decline after reaching multi-month highs in the upper 0.7200s.

The Australian Dollar is showing resilience even after stronger-than-expected US inflation data, which saw US core Consumer Price Index (CPI) inflation increase 0.3% month-on-month in August, exceeding expectations of 0.2%

This marked its fastest monthly increase since April, and the firmer core reading strengthened expectations that the Federal Reserve could raise interest rates at next week's policy meeting.

The traditional relationship between yields, commodities, and the Dollar has been weakened due to uncertainty surrounding US policy environment, fiscal outlook, and concerns about long-term borrowing costs.