Aussie Dollar Gains Strength on Hawkish Hold and Rising Energy Prices

The Australian dollar has seen an uptick in fundamental support due to the Reserve Bank of Australia's (RBA) likely hawkish hold and rising energy prices, which have strengthened its value against European currencies.

Recent data shows that inflation has undershot RBA expectations, while unemployment has overshot, suggesting that the path towards getting inflation back under control may be more advanced than initially thought. However, inflation is still too high, keeping the risk of another interest rate hike on the table.

The market still sees a decent chance of an RBA rate hike by February next year, with probability estimates ranging from 50% to 82% depending on the time frame considered.