Aussie Dollar Surges to Five-Month High on Hot CPI Data and Rate Hike Bets

The Australian dollar is poised to record its longest weekly winning streak since 2021, driven by hotter-than-expected inflation data that has reinforced expectations of further interest rate hikes by the Reserve Bank of Australia (RBA).

The latest consumer price index (CPI) print showed annual inflation running at 4.2% for the March quarter, exceeding both the RBA's forecast and market consensus.

This surprising strength has led traders to price in a higher probability of another rate increase at the RBA's next policy meeting in June, making the Aussie more attractive to yield-seeking investors.