AUD/USD Rally Stalls as Fed Risk Returns to Haunt Aussie Dollar

Australian Dollar Outlook: AUD/USD Rally Stalls as Fed Risk Returns

The Australian dollar's 10-week rally has come to an end, with hot US inflation data reviving expectations of a Federal Reserve rate hike. The release of August's producer and consumer prices saw markets price in an 87% probability of a 25-basis-point hike this week.

Rising crude oil prices have further complicated the inflation outlook, leaving little reason for the Fed not to hike at this stage. RBA officials also keep September tightening risks alive, putting both sides of the AUD/USD pair under significant event risk.