Aussie Dollar Surges as RBA Hike Bets Reach Fever Pitch
The Australian dollar is experiencing significant strength against major currency pairs, driven by rising expectations of an aggressive interest rate hike by the Reserve Bank of Australia (RBA). The hot inflation report released on Wednesday showed that headline inflation rose 1.0% in July, leaving the annual rate at 3.5%, while trimmed mean inflation accelerated to 3.6%. This has pushed markets to borderline price a full RBA rate hike by November.
The data also revealed strong household spending, with nominal spending rising 1.1% in July, beating expectations of 0.4%. Discretionary spending is now growing at an annualised pace of over 10%, the highest since June 2022.
Against this backdrop, the Aussie dollar is breaking key levels against major crosses such as the euro, British pound, and Kiwi. For instance, EUR/AUD broke below support at 1.6260, while GBP/AUD slipped beneath 1.8950. AUD/NZD, on the other hand, cleared its falling wedge structure.