Aussie Dollar Surges as Hot Inflation Data Boosts Hawkish RBA Bets

The Australian dollar has surged against several major currency pairs after Australia's inflation report revealed higher-than-expected price growth in July.

The report showed that headline inflation rose by 1.0% for the month, leaving the annual rate at 3.5%, above market expectations of 3.3%. Meanwhile, trimmed mean inflation, the Reserve Bank of Australia's preferred measure, accelerated to 3.6%, a full percentage point above its target.

This data has led markets to price in a higher likelihood of an interest rate hike by November, with cash rate futures indicating that the chances of a hike by September are around one-in-three and more than 80% for November.